India’s Financial Intelligence Unit (FIU-IND) has directed three major cryptocurrency exchanges to hand over details of over-the-counter (OTC) transactions exceeding $10,000, as reported by the Economic Times. The move, stemming from a meeting in late May, brings large private crypto deals under closer government scrutiny and signals a broader effort to pierce the veil of off-exchange trades where beneficial ownership can be elusive.
The directive specifically targets transactions involving closely held firms, privately held companies, and other structures that make it difficult to identify who ultimately controls the assets. Unlike standard exchange trades, OTC transactions are negotiated directly between a platform and a client, often using the platform’s own capital before a counterparty is found. This method allows high-net-worth individuals and institutions to move large sums without disturbing public order books, but regulators see a heightened risk of money laundering, tax evasion, and illicit cross-border fund flows.
Under the order, exchanges must preserve OTC records dating back to January 2026 and provide additional information when suspicious transaction reports are deemed incomplete. FIU-IND, operating under the Finance Ministry, already requires exchanges to report suspicious activity, but this latest step targets the opacity inherent in OTC desks. “OTC players are primarily private companies where the KYC procedure can be a greater challenge compared to retail investors,” an official at a crypto intermediary told the Economic Times, adding that verifying directors and ultimate beneficial owners is tougher than checking a retail customer’s identity, while fake documents remain a persistent risk.
India’s action aligns with a global regulatory trend. The United States passed the GENIUS Act for stablecoin oversight and advanced the CLARITY Act to define digital asset jurisdiction between the SEC and CFTC. Similarly, the UK, Singapore, Australia, and the European Union are intensifying pressure on crypto intermediaries to upgrade transaction monitoring and customer due diligence. The message is clear: regulators are moving beyond exchange-based trading to target the private channels where large transactions occur away from public sight.
For OTC desks and institutional clients in India, the directive means a higher compliance burden—exchanges must now prove robust beneficial-ownership checks, record-keeping, and tracking of funds from source to destination. This development confirms that off-exchange trades will not escape regulatory oversight simply because they bypass public order books.
