Core Insights - India's Financial Intelligence Unit (FIU) has reported that 49 cryptocurrency exchanges have registered under the anti-money laundering framework for the fiscal year 2024-25, indicating enhanced regulatory oversight in the digital asset sector [1][2]. Regulatory Developments - The majority of the registered platforms are domestic, with 45 exchanges operating within India, while four are offshore platforms registered as reporting entities [2]. - In 2023, cryptocurrency exchanges were formally brought under the Prevention of Money Laundering Act (PMLA), requiring them to submit Suspicious Transaction Reports (STRs) and comply with various reporting obligations [3]. Compliance and Enforcement - The FIU's strategic analysis of STRs has identified ongoing risks in the cryptocurrency ecosystem, including the use of digital assets for illegal activities such as hawala operations and fraud schemes [4]. - The report highlighted that the FIU imposed penalties totaling ₹28 crore (approximately $3.1 million) on non-compliant crypto exchanges during the 2024-25 fiscal year, and notices were sent to 25 exchanges for failing to adhere to anti-money laundering rules [6]. Market Activity - Despite regulatory challenges, several major global exchanges, including Bybit, have resumed operations in India after fulfilling local registration requirements and paying penalties [7].

RT BSCN (@BSCNews)INDIA MAY SOFTEN CRYPTO TAX GRIP — CBDT OPENS TALKS- India’s tax office has opened formal talks with crypto firms, marking a potential shift from its harsh stance.- The Central Board of Direct Taxes (CBDT) circulated a detailed questionnaire to exchanges this month, asking for input on how to design a workable regime for virtual digital assets (VDAs).- Questions cover whether India should draft a dedicated law, which agency should oversee it, and how to refine tax rules.- Stakeholders were ...

Regulatory Landscape & Taxation - India's tax office (CBDT) initiates formal discussions with crypto firms, signaling a potential shift from its stringent stance [1] - CBDT seeks input on designing a workable regulatory regime for virtual digital assets (VDAs) [1] - Stakeholders are consulted on the 30% flat tax and the 1% tax deducted at source (TDS) on trades [2] - CBDT addresses concerns regarding derivatives, cross-border transactions, and compliance with the OECD's new global reporting standard [2] Industry Concerns & Market Impact - The industry argues that current tax rules stifle liquidity and drive traders to friendlier markets [2] - Crypto exchanges compare India's regulations with those in other major jurisdictions [3] - The current framework taxes crypto more heavily than equities, treating every trade as a taxable event, hindering domestic activity [3] Future Outlook - Legal experts suggest the consultations could be the first step towards comprehensive regulation [3] - Crypto firms hope for a fairer tax regime and clarity on oversight [3] - India's future actions will determine its role in the global digital asset market [4]