India Cracks Down on 25 Crypto Exchanges Over AML Compliance Failures

Core Insights - India is intensifying its crackdown on crypto exchanges, issuing notices to 25 platforms for anti-money laundering (AML) compliance violations [1][2] - The Finance Ministry confirmed that these exchanges must withdraw their apps and websites from public access in India [1] - The affected exchanges manage billions in user assets, with 14 of them generating over $22 billion in trading volume in the last 24 hours [1] Regulatory Environment - India's AML enforcement against offshore crypto platforms reflects a tightening policy stance, despite the absence of a comprehensive digital asset framework [2][3] - The Finance Ministry has mandated virtual asset service providers (VASPs) to register with the Financial Intelligence Unit-India (FIU-IND) under the Prevention of Money Laundering Act (PMLA) [2] - The Reserve Bank of India (RBI) has expressed concerns about the difficulty of effective regulation, leading to a preference for partial oversight [3] Taxation and Compliance - Heavy taxation, including a 30% tax on profits and a 1% tax deducted at source on transactions, has significantly reduced domestic trading volumes [3] - Over 50 crypto exchanges have registered with FIU-IND, indicating a trend towards rising compliance among global exchanges [4] Enforcement Actions - Major exchanges like Binance, Coinbase, KuCoin, and OKX have faced enforcement actions, with some, like OKX, exiting the Indian market [5] - Exchanges that comply with local regulations, such as paying fines and registering with FIU, have been allowed to resume operations [5] Market Impact - Officials estimate that Indians hold approximately $4.5 billion in digital assets, with strict regulations limiting risks to the broader financial system [6]