India’s Crypto Regulations Under PMLA: Where We Stand in 2025

The Government of India reshaped the digital asset landscape by bringing the crypto sector under the Prevention of Money Laundering Act, 2002 (PMLA) in March 2023. 

This step meant crypto intermediaries like exchanges and wallet providers had to tighten their compliance standards, track transactions more closely, verify user identities, and report suspicious activity. The Enforcement Directorate (ED) also got a clear mandate to investigate questionable crypto dealings.

Now, let us look at how things stand as of September 2025. While the core framework remains unchanged, a series of regulatory tweaks, enforcement drives, and tax updates have created a clearer and stricter environment. India has also become more proactive in aligning with global standards, emphasising international data sharing and standardised compliance, even as it retains its position as the world’s leading nation in crypto adoption.

Let’s take a quick look at where things stand today.

1. KYC and Compliance Are Tougher Than Ever

Crypto platforms in India are treated much like traditional financial institutions when it comes to Know Your Customer (KYC) and Anti-Money Laundering (AML) norms. Full identity verification, address proofs, and continuous monitoring are mandatory. 

The Financial Intelligence Unit–India (FIU-IND) mandated stricter KYC norms effective June 30, 2025. Platforms must now refresh details for accounts older than 18 months and apply deeper checks on high-risk users. From July 7 this year, an 18% GST on trading fees and services was also introduced, adding to the existing 30% tax on gains.

Industry leaders from major Indian exchanges have welcomed these measures, calling them essential for legitimacy. With India advocating global standards through the G20 and preparing to adopt the OECD’s Crypto-Asset Reporting Framework (CARF) by 2027, compliance is becoming internationally harmonised. CARF will allow automatic cross-border sharing of crypto transaction data, curbing tax evasion and illicit flows.

2. Record-Keeping and Reporting Are Expanding

Crypto trade histories and user records continue to be stored for at least five years, often longer under taxation laws, giving regulators tools to trace fund flows when needed. Exchanges are required to report suspicious transactions promptly to FIU-IND.

By 2025, reporting has intensified. CARF-readiness means Indian exchanges are preparing for more detailed disclosures, especially for cross-border transactions. Over 30 platforms, including Binance (re-admitted in August 2024), are FIU-registered. Non-compliance brings heavy penalties or even shutdowns. The ED has already cracked down on unregistered apps and scams, including fraudulent loan apps linked to crypto laundering.

The upside? Standardisation has strengthened trust. As per the Crebaco data, compliant Indian exchanges saw trade volumes surge in 2025. With India’s crypto user base crossing 100 million, a regulated environment is boosting confidence among legitimate investors.

What This Means for Investors in 2025

The rules may be tighter, but crypto is thriving in India. In fact, the country ranks number one globally in crypto adoption. 

Here’s how investors should approach the market now:

Stick to FIU-Registered Exchanges

Trading on FIU-registered Indian exchanges is the safest route. Offshore platforms often bypass India’s 1% TDS rules and reporting requirements, leaving compliance risks on the investor. 

KYC can feel tedious, requiring PAN, Aadhaar, and sometimes video verification but once completed, the process is smooth and secure. Exchanges without such checks are likely non-compliant and risky. Notably, trading volumes on compliant platforms are booming in 2025, reflecting investor preference for safety and legitimacy.

Pay Your Taxes and Declare Everything

Crypto taxation is stricter than ever. Gains are taxed at a 30% flat rate, with 1% TDS on transactions above thresholds (₹50,000 or ₹10,000 in some cases). The new 18% GST on fees adds to the cost but brings transparency.

Under ITR Schedule VDA, all crypto and NFT holdings must be declared, even if unsold. Failure to comply could invite penalties of up to 200% or even imprisonment. While losses cannot be carried forward, they can be offset against future gains. And with CARF arriving by 2027, even offshore holdings will be automatically reported making tax evasion nearly impossible.

The Bottom Line

India’s regulatory approach has shifted from uncertainty to structured oversight under PMLA, making the crypto market more mainstream yet tightly monitored. Importantly, there is no ban in sight. Instead, upcoming proposals like the COINS Act 2025 aim to ease taxes and establish a dedicated Crypto Authority.

For investors, the path is clear: stick with compliant exchanges, stay updated on tax rules, and play by the book. Crypto in India is not just surviving, it is leading the global pack in adoption and shaping the future of digital finance.