UK Crypto Exchanges Serving Indian Users: FIU-IND Registration and Tax Reporting

UK crypto exchanges and brokers are preparing for the FCA’s new regime, and many are already planning to serve Indian customers as part of their growth. Two things are easy to miss. An FCA authorisation doesn’t give a firm the right to serve users in India. And India has its own registration and reporting regime for crypto service providers, which it enforces against offshore platforms.

This guide explains why a UK exchange with Indian users needs to think about FIU-IND registration, how enforcement against offshore platforms has developed in 2025 and 2026, what registration requires, the Indian tax touchpoints, and the options for a dual-compliance approach. It is written from the Indian-law perspective; UK financial regulation and UK tax points should be confirmed with your UK advisers.

Two regimes at once

The UK is bringing cryptoasset activities into the regulatory perimeter under the Financial Services and Markets Act 2000. The FCA published its final rules and guidance on 30 June 2026, the application window runs from 30 September 2026 to 28 February 2027, and the new authorisation requirements are reported to take effect on 25 October 2027 (Baker McKenzie; Lewis Silkin; K&L Gates). The regime applies to regulated activities carried on in the UK or provided to persons in the UK, so overseas firms with UK customers may also need authorisation. That is a UK question for UK advisers.

India’s regime is separate, and it applies on its own terms. Since March 2023, India has treated virtual digital asset service providers as reporting entities under the Prevention of Money-laundering Act, 2002, which means they have to register with the Financial Intelligence Unit - India, known as FIU-IND, and comply with anti-money laundering and counter-terrorist financing duties. An FCA authorisation doesn’t satisfy it, and the reverse is also true.

For a UK exchange, the question is therefore not only whether it is authorised in the UK, but also whether it is serving users in India. If it is, it has to deal with FIU-IND as well as the FCA. Putting both questions into one board paper, with a decision on the approach and the reasons, is good practice, because both regulators will want to see that the position was considered.

Who counts as serving Indian users

A virtual digital asset service provider, in the Indian definition, is a business that carries out activities for or on behalf of others, such as exchanging virtual digital assets for fiat or for other assets, transferring them, safekeeping or administering them, or providing financial services related to an issuer’s offer and sale. FIU-IND’s position is that the obligations are activity-based and don’t depend on the entity having a physical presence in India (Anantam IAS; CryptoSlate).

So the practical test is whether the platform is serving users located in India. Factors that point that way include an app that can be downloaded from Indian app stores, Indian-language marketing or influencer campaigns, support for rupee payments or UPI, Indian phone numbers at sign-up, a customer base that includes Indian residents and a website that lists India as a supported country. Serving an Indian national who lives in the UK and banks in the UK is a UK activity. Serving someone in Mumbai who uses your app with a rupee payment method is serving a user in India.

Enforcement has been active. FIU-IND blocked and penalised offshore platforms in 2023 and 2024, issued notices to 25 offshore platforms in October 2025 and, in September 2026, issued non-compliance notices to 15 offshore virtual digital asset service providers with directions to take down their apps or URLs for public access, under Section 13 of the PMLA (Outlook Business; DD India; Anantam IAS). A platform that ignores this risks app blocking in India, penalties and reputational harm in one of the world’s largest crypto markets.

What FIU-IND registration requires

A registered provider must appoint a Principal Officer and a Designated Director, carry out know-your-customer and customer due diligence checks, screen customers against sanctions lists, file suspicious transaction reports and other prescribed reports with FIU-IND, apply the travel rule to transfers, and keep records. FIU-IND’s AML and counter-terrorist financing guidelines for virtual digital asset service providers were updated on 8 January 2026 (CryptoSlate).

A UK exchange will find much of that familiar, because it parallels the UK money laundering regime that FCA-registered cryptoasset businesses already follow. But the reporting is India-specific: reports go to FIU-IND in its own formats, and the Principal Officer must be able to deal with Indian authorities and respond to their requests. Plan the staffing and systems for that, and check with Indian counsel whether the officers must be resident or available in India.

Be accurate in how you describe the registration. FIU-IND registration is an anti-money laundering registration, not a licence, and it doesn’t mean the platform is authorised by the Reserve Bank of India or the Securities and Exchange Board of India. Marketing that suggests Indian regulatory approval beyond registration invites enforcement and can mislead users. Also remember that registration alone doesn’t solve the other Indian risks, such as tax, consumer protection and advertising rules.

Indian tax touchpoints and reporting

India taxes gains from virtual digital assets at a flat 30% with no set-off of losses, and it charges 1% tax deducted at source on transfers above specified thresholds. For a platform serving Indian users, the deduction mechanics and who is responsible for them depend on how the platform is structured, so take Indian tax advice early. Since 1 April 2026, reporting entities, including crypto exchanges, are reported to have to file information on crypto transactions under Section 509 of the Income-tax Act, 2025, which makes Indian users’ activity visible to the tax department.

International reporting is also growing. The OECD’s Crypto-Asset Reporting Framework, known as CARF, requires crypto service providers to collect information about the tax residence of their users and report it to their tax authority for exchange with other countries. The UK has been an early adopter, with its rules starting from 2026, and India has indicated that it will take part in international crypto reporting. A UK exchange with Indian-resident users will collect their residence details under the UK rules, and that information can reach the Indian tax authorities when exchange begins. Confirm the current status of the UK rules and the Indian participation with your tax advisers, because the dates are still developing.

The practical effect is that Indian users of a UK exchange are increasingly traceable. That affects your customers’ compliance with Indian reporting duties, such as disclosure of foreign assets, and it affects how you should describe tax in your own materials. Avoid implying that holding crypto with a UK exchange takes users outside the Indian tax system, and consider offering a plain-language note that explains the user’s own responsibilities.

Dual compliance options, remedies and quick answers

A UK exchange with Indian users has three realistic options. It can register with FIU-IND and build an India compliance function alongside its FCA framework. It can exclude users in India through KYC checks, geographic restrictions, payment-rail controls and marketing controls, and keep serving Indian nationals who live in the UK. Or it can serve Indian users only through a separately structured and registered offering. Whichever option you choose, record it in a board-approved policy and test the controls, because regulators in both countries will want to see that the approach was deliberate and effective. If FIU-IND issues a show-cause notice, respond fully and on time, register if required, and ask for a hearing before any penalty. Penalty orders under the PMLA can be appealed to the Appellate Tribunal and then to the High Court, and a blocking order under Section 69A of the Information Technology Act can be challenged, although registration is usually the fastest way to restore access. Keep the evidence of your controls, and don’t make public statements about the Indian position before taking advice.

Related reading: FIU-IND registration for crypto exchanges and Web3 businesses, why Dubai exchanges also need FIU-IND registration, crypto tax in India vs the UK, crypto tax in India explained, the RBI leaning towards prohibition, India’s crypto policy paper and the regulatory vacuum and stablecoins in India; also the FCA crypto authorisation deadline for overseas firms, how the UK crypto regime reaches Indian Web3 startups, UK staking regulation for Indian providers and UK stablecoin rules for Indian payment startups; also the FCA DeFi consultation for Indian protocol developers and UK crypto promotions and Indian influencers; also the HMRC crypto letter and Indian crypto holdings; also CARF for UK investors with Indian exchange accounts.

Quick answers

Does an FCA authorisation allow a UK exchange to serve users in India?

No. India has its own registration regime for virtual digital asset service providers, and FIU-IND enforces it against offshore platforms that serve users in India.

Can a UK exchange serve Indian nationals living in the UK without FIU-IND registration?

Serving UK residents is a UK activity, but serving users located in India triggers FIU-IND obligations, so the platform’s controls need to distinguish the two.

Is FIU-IND registration a licence?

No. It is an anti-money laundering registration and doesn’t mean the platform is authorised by the RBI or SEBI.

What are the new UK crypto regime dates?

Commentary on the FCA’s final rules reports publication on 30 June 2026, an application window from 30 September 2026 to 28 February 2027, and authorisation requirements taking effect on 25 October 2027. These are UK-law points for UK advisers to confirm.

What happens if FIU-IND sends a notice?

Respond fully and on time, register if required, and ask for a hearing before any penalty. Penalty orders under the PMLA can be appealed to the Appellate Tribunal and then the High Court, and registration is usually the fastest way to restore access after a blocking order.

Final word

Halverton & Co. is an Indian law firm advising UK companies, founders, investors and law firms on Indian law, including FIU-IND registration, PMLA compliance and India-facing structuring for offshore crypto platforms. We practise in Jharkhand, Maharashtra and before the Supreme Court of India, and work alongside your UK solicitors, who advise on English law. Halverton & Co.: Where tech needs law! If you have a question about Indian law, write to us at office@halvertonandco.com, or get in touch.

This article reflects developments reported up to late October 2026. It is for general information only, is not legal advice, and does not create a solicitor-client relationship. Halverton & Co. is an Indian law firm, is not authorised or regulated by the Solicitors Regulation Authority, and does not advise on English law or UK financial regulation or tax; UK-law points should be confirmed with UK advisers.