In India, over 2 lakh cryptocurrency accounts have been banned in the last six months.

Decentralized cryptocurrency has steadily been part of the popular narrative over the last year. On the other side, digital money has given a platform for online illegal activities such as tax evasion and other types of significant fraud. Between April and September 2021, the main three cryptocurrency exchanges – WazirX, CoinSwitch Kuber, and CoinDCX – banned nearly two lakh accounts on the grounds of criminal activity.

In the last six months, CoinSwitch Kuber has terminated 180,000 accounts, and it is presently monitoring the daily actions of about 200,000 accounts that might be harmful. Following demands from Indian and foreign law enforcement authorities, WazirX has banned 14,469 accounts. There were 38 inquiries from foreign law enforcement authorities. These came from the United States, the United Kingdom, France, Austria, Switzerland, and Germany. However, after complaints from other users and the company's internal tracking process, over 90% of the accounts were banned.

The Enforcement Directorate has issued WazirX a show-cause notice for suspected violations of the Foreign Exchange Management Act on transactions using cryptocurrencies worth Rs. 2,790 crores. It has launched an inquiry into Chinese-owned illicit betting apps as part of its continuing money-laundering investigation. When one may transmit bitcoin outside of the exchange, Pandora's box opens. The regulators' main concern is consumers buying bitcoin on one platform and transferring them to unknown addresses. Nobody knows who these addresses belong to or what the purpose of these addresses is. Even cryptocurrency exchanges will be unable to monitor it.

To address this problem, CoinSwitch Kuber prohibits users from withdrawing or moving bitcoin money. To withdraw their funds, customers must first sell the crypto asset on the exchange and have the funds put straight into their Indian rupee bank accounts. Though the exchanges themselves are banning questionable accounts, policy experts say the main issue is a lack of regulation. Cryptocurrencies are mainly uncontrolled. While the Reserve Bank of India has indicated reservations about legalizing cryptocurrencies, the government has yet to take a position on the matter.