India Cracks Down on Large Crypto Trades, Targets Shadow Market Transactions

India's Financial Intelligence Unit (FIU) has issued a directive to three major cryptocurrency exchanges, requesting information on over-the-counter (OTC) transactions worth more than $10,000. This move signals a tightening grip on shadow trades and highlights the government's desire for greater visibility into off-exchange transactions.

The FIU-IND operates under India's Finance Ministry and receives and analyzes reports on suspicious financial transactions. Crypto exchanges in India are already required to report suspicious activity, but this new directive seeks more information on large OTC deals.

Exchanges have been asked to preserve OTC records dating back to January 2026, and the FIU can request additional information when suspicious transaction reports filed by platforms are incomplete or when investigative agencies need more details.

The main regulatory concern is beneficial ownership, as OTC clients may receive faster service, negotiated pricing, and quicker withdrawal of purchased crypto into private wallets. Once assets leave an exchange, they can be transferred across borders or to other wallets with fewer traditional banking controls.