India orders exchanges to monitor crypto in border regions
Private wallets face scrutiny as India targets crypto flows
India’s government has intensified its regulatory grip on cryptocurrency activity, this time focusing on transactions originating from border areas, particularly Jammu & Kashmir.
In response to national security concerns and the risk of illicit funding, the Financial Intelligence Unit of India (FIU-IND) has instructed crypto exchanges to closely monitor trades and peer-to-peer (P2P) wallet transactions linked to these regions, according to The Economic Times.
The order follows a recent attack in Pahalgam, a town in Kashmir, which has heightened fears over the misuse of crypto assets for terrorism financing. Authorities have flagged the emergence of suspicious tokens such as “Pahalgam” and “Operation Sindoor”, appearing on blockchains like Solana, as part of the growing concern.
Private wallets and Binance transfers under watch
The FIU-IND has raised alarms particularly around private wallet activity, which allows users to send funds directly without going through centralized exchanges. These wallets, while offering greater user autonomy, make tracking and reporting far more difficult. Indian exchanges have started verifying whether external wallets—particularly those on Binance—are owned by customers before permitting withdrawals.
Despite these efforts, once funds are moved to global platforms like Binance, regulators admit that fund tracing becomes difficult, especially given the lack of unified international crypto compliance standards.
SEBI expands oversight to investment funds
In parallel, the Securities and Exchange Board of India (SEBI) has asked trustees of Alternative Investment Funds (AIFs) to step up anti-money laundering controls. The move reflects broader efforts to shield India’s financial ecosystem from illicit crypto flows, especially in sensitive or high-risk areas.
India’s crypto regulation strategy is entering a more assertive phase, as border tensions and digital finance intersect. With rising geopolitical sensitivities, crypto players operating in India can expect increased surveillance, tighter controls, and growing pressure to prove compliance. The industry will be watching whether these regional restrictions evolve into national or even international policy discussions.
Read also: Arizona governor vetoes bills on crypto reserve.
