Opinion As dirty money flows through crypto markets, raise the guardrails
A shadow economy has emerged across the world, and India is no exception. With more than 100 million users, India is a big crypto market
A shadow economy has emerged across the world, and India is no exception. 
Since the advent of Bitcoin, and the subsequent proliferation of cryptocurrencies, there have been concerns over the regulatory challenges posed by the crypto universe. Over the years, numerous instances of fraud, scams and other illicit activities have come to light. For instance, in 2022, FTX, a cryptocurrency exchange, collapsed, and its founder Sam Bankman-Fried was convicted for fraud and conspiracy to launder money. In 2023, Changpeng Zhao, founder of Binance, the world’s largest crypto exchange, pleaded guilty to violating US anti-money laundering laws. Crypto exchanges have been levied with fines, penalties and settlements in excess of $5.8 billion, as per an analysis by the International Consortium of International Journalists (ICIJ). In India, between 2024 and 2025, the Financial Intelligence Unit has levied fines on Binance (Rs 18.82 crore), ByBit (Rs 9.27 crore) and KuCoin (Rs 34.5 lakh) — for violating anti-money laundering laws. Crypto regulation is fragmented. Taking advantage of this grey zone, crypto exchanges have become hubs for dirty money to cross national borders as shown by an investigation by this paper, in partnership with the ICIJ. This is a matter of grave concern.
A shadow economy has emerged across the world, and India is no exception. As this paper’s investigation reveals, between January 2024 and September 2025, the Indian Cyber Crime Coordination Centre (I4C) has marked out at least 27 exchanges for being used allegedly for laundering purposes. The anonymity that crypto offers along with the ease of transferring across borders makes this a widely preferred medium. For instance, following the Russia-Ukraine conflict, the World Economic Forum noted that there were concerns over the use of crypto to evade international sanctions. In addition to hawala deals, even money stolen by cybercrimes is being channeled through these routes — as per an estimate, Rs 623 crore has been funneled. An analysis of 144 cases by I4C reported in this paper shows that the trail runs through places like Dubai, Cambodia and China.
India, with more than 100 million users, is a big crypto market. However, there is no overarching crypto framework that regulates the sector. Crypto exchanges, wallet providers and others must register with the Financial Intelligence Unit. But those who have done so account for only a small proportion of the universe. As this space grows — from $2.6 billion to $15 billion by 2035, as per an estimate — there is need for policy clarity. The guardrails need to be put in place.
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