India raids platforms and tightens OTC oversight

TLDR

India is combining enforcement raids with stricter reporting rules to strip anonymity from large, private crypto transactions.

1. Indias FIU has ordered major exchanges to report all OTC crypto trades above 10,000 dollars and identify their real beneficial owners.
2. Enforcement officers recently raided several Bengaluru-based crypto platforms over alleged rule violations tied to cross-border transfers.
3. The focus is on large OTC and offshore activity, not a crypto ban, but users should expect tighter KYC and less room for opaque deals.

Deep Dive

1. New Reporting Rules For OTC Crypto

Indias Financial Intelligence Unit (FIU?IND) has directed at least three major exchanges to provide detailed records of every over?the?counter (OTC) crypto trade above 10,000 dollars, including the ultimate beneficial owners behind companies and intermediaries involved in these deals. This applies to high value, privately negotiated trades outside the public order book, where whales and institutions typically transact discreetly.

According to regulatory summaries, exchanges must keep and share transaction records, ownership structures, funding sources, and justifications for reportable OTC trades, with ongoing record?keeping obligations from January 2026 onward and, in some reports, retrospective data requests back to earlier periods. The intent is to close a gray area where large transfers could avoid full AML visibility by using OTC desks instead of regular exchange books.

2. Raids On Non?Compliant Crypto Platforms

Alongside the FIU order, Indian authorities conducted raids on five Bengaluru?based crypto platforms for alleged violations of foreign exchange rules related to unauthorized cross?border transfers. These actions sit within a broader wave that also includes tens of thousands of tax notices and previous penalties on exchanges for AML breaches.

The message is that non?registered or non?compliant platforms, especially those facilitating cross?border flows without proper reporting, face a real risk of search, seizure, and fines, not just warnings.

3. Impact On Users, OTC Desks, And Offshore Access

These moves do not ban owning or trading crypto in India; the existing 30 percent tax on gains and 1 percent TDS remain unchanged. Instead, regulators are targeting opacity: large OTC trades, complex corporate structures, and offshore or semi?offshore venues serving Indian users without full registration.

In parallel, some global platforms are tightening rules for Indian users, such as requiring full sender and beneficiary details for deposits and withdrawals, while prediction market sites and other speculative platforms have begun geofencing India after local advisories. Together, this points to a regime where high value crypto activity is treated similarly to large bank transfers, with full identity, source of funds, and cross?border controls.

Conclusion

Indias latest raids and OTC reporting mandates point to a clear strategy: allow crypto, but remove anonymity for large flows and clamp down on unregistered or cross?border channels. For Indian crypto users and OTC counterparties, the edge shifts toward compliant venues and fully documented trades, while aggressive use of opaque desks or offshore workarounds increasingly carries regulatory and operational risk.