India's Financial Intelligence Unit is seeking detailed records from top crypto exchanges regarding over-the-counter transactions. This request targets trades over $10,000, or approximately 9.44 lakh rupees, conducted since January 2026. The move follows discussions held with exchange operators, reflecting a growing focus on the crypto sector.
#Why Are OTC Desks Under Scrutiny?
OTC desks serve as platforms for large-scale buyers and sellers to negotiate trades in a more private setting. These transactions often occur through intermediaries, allowing participants to execute trades at set prices while minimizing exposure to market fluctuations. Due to the nature of these trades, high-value transactions are frequently withdrawn to private wallets rather than custodial accounts on exchanges, complicating regulatory oversight and heightening the risk of money laundering and evasion of sanctions.
The agency particularly emphasizes the verification of beneficial ownership in transactions involving private parties. The use of shell companies and complex corporate structures can obscure the true ownership, making it easier to mislead authorities while moving prohibited funds under the disguise of legitimate transactions.
#Understanding the Regulatory Framework
The authority of the Financial Intelligence Unit stems from the Prevention of Money Laundering Act. Over the last few years, crypto exchanges have been incorporated into this framework. As of early 2026, 49 crypto exchanges have registered as reporting entities, comprising 45 domestic and four offshore platforms that cater to Indian traders. This registration mandates these exchanges to report any suspicious activities through Suspicious Transaction Reports when they encounter potential illegal actions.
Besides standard reports, the agency can demand additional information when further investigation is necessary to address potential criminal activities. The established threshold of $10,000 aligns with the global guidelines set by the Financial Action Task Force, which aims to identify significant transactions.
#What Does This Mean for Investors?
Investors operating on standard exchanges may not feel immediate effects from this directive; however, it primarily aims at institutional trading desks and high-net-worth individuals conducting substantial private trades. India's crypto landscape already imposes a 30% tax on gains combined with a 1% Tax Deducted at Source applicable to transactions. The introduction of OTC reporting obligations could result in a shift of privacy-conscious traders towards offshore platforms while simultaneously enhancing the institutional reputation of compliance in the sector.
In summary, India now boasts 49 registered exchanges under the PMLA framework, supported by a vigilant financial intelligence body that actively requests transaction records. Investors should stay informed and adapt to the evolving landscape of crypto regulations.