India’s Financial Intelligence Unit has asked three major cryptocurrency exchanges to hand over detailed records of over-the-counter transactions exceeding $10,000, zeroing in on who ultimately controls the private companies and intermediaries that execute these trades. The directive requires exchanges to trace and retain information dating back to January 2026, marking a significant effort to close transparency gaps that have allowed large crypto moves to slip past the public exchange order books. The original report indicates the FIU is particularly focused on identifying the ultimate beneficial owners behind layered corporate structures.
This move pushes India further along a trajectory that began with the country’s crypto tax rules and the mandatory FIU registration for virtual asset service providers. Now the anti-money laundering watchdog is drilling into the specific mechanics of off-exchange trading, which often handles institutional-sized blocks and high-net-worth flows without the same real-time surveillance as centralized limit order books. The $10,000 threshold is low enough to capture a wide swath of trades, forcing exchanges to rethink how they log and report OTC activity that may have previously been treated as a grey area.
OTC Surveillance Tightens in India
OTC desks have long been a preferred channel for moving large amounts of crypto without causing slippage or revealing a trader’s intentions on public markets. But that very privacy has increasingly drawn the attention of regulators worldwide. India’s FIU is now demanding that exchanges identify the real people or entities behind shell companies and intermediary firms that frequently appear in OTC settlement layers. The burden falls squarely on the exchanges to review existing client data and potentially request new disclosures from corporate account holders.
Compliance won’t be cheap. Exchanges will need to bolster their know-your-business and know-your-transaction frameworks, linking each OTC trade to verified beneficial ownership. For international platforms serving Indian clients, the question becomes whether they’ll adapt their global systems to meet this new Indian requirement or steer clear of the market to avoid regulatory risk. This echoes the pressure that came with the FIU’s registration mandate earlier, when several offshore exchanges had to either register locally or face access restrictions.
Global Pattern of Closing Off-Exchange Loopholes
India’s action is far from isolated. Regulators in Hong Kong, the European Union, and South Korea have all stepped up scrutiny of OTC crypto trading over the past year, often linking large unmonitored transfers to money laundering, sanctions evasion, and tax avoidance. The Financial Action Task Force’s travel rule has already pushed exchanges to share originator and beneficiary information for transactions above certain thresholds. Now the focus is shifting from simple transaction data to the corporate control chains that can obscure true ownership. The US is fighting its own battle over a comprehensive crypto bill that banks are trying to reshape just days before a Senate vote.
While public exchanges have grown accustomed to tighter identity checks, the OTC segment remains patchy. Some desks operate almost like traditional broker-dealers, with rigorous client intake, while others rely on lighter-touch processes that fall outside the exchange’s main compliance engine. India’s FIU seems determined to bring the latter into the same strict framework. The fact that records are being demanded from January 2026 suggests the regulator expects a historical audit, not just a forward-looking change.
What Exchanges and Traders Face Next
Many questions remain unanswered. It’s unclear which three exchanges received the FIU request, and whether they are domestic or offshore. Major international exchanges that already comply with similar demands in other jurisdictions might adapt quickly, but smaller platforms or those without a strong compliance presence in India could struggle. The timeframe for producing records could also prove challenging, especially if beneficial ownership information wasn’t collected at the point of trade.
For traders and institutions, the order changes the risk calculus around using OTC channels from Indian-linked entities. Large crypto flows that once moved quietly through broker networks may now face the same transparency requirements as traditional financial transfers. Some may shift activity to truly peer-to-peer arrangements that fall outside the exchange umbrella entirely, which would ironically make tracking even harder. On the other hand, the growing regulated tokenization market—where real-world assets have crossed $20 billion on-chain, as covered in a recent institutional tokenization roundup—shows that large players are simultaneously moving toward compliant, transparent infrastructure.
The FIU’s move signals that India sees OTC crypto as a serious anti-money laundering vulnerability, not just a niche market feature. Exchanges that treat the request as a one-off reporting exercise may find themselves facing deeper audits and potential penalties down the line. The next few months will reveal how quickly they can restructure their compliance workflows—and whether this prompts a wider regulatory push across other Asian markets.
