India’s Financial Intelligence Unit has requested information from three major cryptocurrency exchanges about over the counter (OTC) crypto transactions exceeding 10000 dollars, according to the Economic Times. This move signals that authorities want to monitor off-exchange, large-scale deals more closely than ever before.
Tighter scrutiny on over the counter crypto trades
The request reportedly followed a late May meeting. The main focus of the investigation is on closely held corporations, private equity firms, and other structures where identifying the ultimate beneficiary is more challenging. Unlike standard exchange trades, OTC transactions are typically negotiated directly between the platform and the customer, bypassing public order books.
For large buyers, this approach offers a way to limit market price swings. However, the reduction in transaction transparency has drawn regulatory attention, with officials seeing these channels as higher-risk for money laundering, tax evasion, and cross-border fund movements.
Mini glossary: An over the counter transaction occurs when buying or selling takes place directly between a buyer and seller, or through an intermediary desk, instead of via a public order book. This setup can limit price impact in high volume trades but makes monitoring the parties and purpose much more difficult.
Operating under the Ministry of Finance, India’s Financial Intelligence Unit is responsible for collecting suspicious transaction reports. Registered Indian crypto exchanges were already required to report questionable activities. The latest directive, however, means they must now provide more detailed data on large OTC deals.
The ultimate beneficiary in the spotlight
According to reports, exchanges have also been told to store OTC transaction records through January 2026. The Financial Intelligence Unit can demand more data if it deems the submitted suspicious activity reports insufficient or if additional information is needed during ongoing investigations.
A crypto brokerage source explained that most OTC clients are private companies, making identity verification much trickier than for individual investors. Verifying company directors and ultimate beneficiaries is more complex, and the risk posed by fake identity documents remains a persistent issue for both banks and crypto platforms alike.
For high income clients, institutional investors, and corporates, the core appeal of this channel is the ability to move big sums without directly impacting public order books. Moreover, the quick withdrawal of purchased assets to private wallets and the potential for fast cross border transfers have raised fresh questions among regulators.
Regulators’ top concern remains clearly establishing the true owner of the funds. If the buyer is a private company, trust, or intermediary entity, pinpointing who ultimately controls the money becomes significantly harder.
Move aligns with global regulatory trends
India’s steps echo a broader global trend to close transparency gaps in crypto markets. Many countries are introducing stricter requirements around identity verification, ultimate beneficiary disclosures, transaction reporting, and stablecoin oversight.
Regulators in the United Kingdom, Singapore, Australia, and the European Union are ramping up pressure for crypto intermediaries to strengthen transaction monitoring and client due diligence. The overall picture is clear regulators are no longer focused only on exchange based trades, but are also targeting large movements outside public order books.
Given this direction, India’s OTC desks and institutional clients can expect greater compliance obligations. Exchanges will have to implement robust controls to track the origins of major funds, identify the real parties behind transactions, and monitor the final destination of crypto assets after the trade.
