No policy is complete without enforcement: unregistered crypto platforms must be held accountable
New Delhi : As crypto assets transition from the periphery of finance to the center of global regulatory debate, standard-setting institutions everywhere are raising the alarm. The Financial Action Task Force (FATF), the International Monetary Fund (IMF), and the Financial Stability Board (FSB) have all highlighted the imperative for addressing the risks presented by crypto assets — above all, their contribution to facilitating illegal financial flows. In India, what was once seemed as fringe is increasingly becoming alarming with unauthorised websites using crypto-payment rails.
A recent report, “The Gambling and Betting Market in India”, reveals how illegal offshore betting websites are growing rapidly by using cryptocurrency for payments. This helps them hide the flow of money and slip past regulators. Many of these platforms are set up in tax havens and are aggressively promoted online, posing a real threat to the country’s financial system and security of India's digital economy.
The report highlights how shady platforms for illegal gambling have adopted cryptocurrencies not only as a payment tool but also as an operational component. Once users initiate a deposit, usually via UPI or foreign wallets like AstroPay, they are quickly presented with the option to switch to crypto payments, usually following the first transaction. This approach reduces the friction generated by conventional payment control systems and makes the money trail more difficult to follow. The findings are quite alarming and show that in late 2024, just four illegal platforms (Parimatch, Stake, 1xBet, and Batery Bet) had over 1.6 billion visitors in just three months. Many of these operators publicly accept deposits by e-wallets, UPI, and, increasingly, cryptocurrency assets like USDT, Ethereum, and Bitcoin. Although honest consumers find crypto appealing because of its distributed and borderless character, it also provides these websites with a powerful tool for money laundering, tax avoidance, and regulatory framework circumventing.
In India, these issues are no longer hypothetical. According to the report, illegal offshore betting sites are aggressively using cryptocurrency payment rails to launder money, avoid discovery, and operate on a large scale. These platforms, which are frequently hosted in tax havens and promoted through aggressive digital marketing, exploit the anonymity and decentralization of cryptocurrencies to avoid financial safeguards and regulatory scrutiny, posing a clear and present threat to India's digital economy and financial integrity.
Unfortunately, it is not just these gambling platforms that are operating behind the scenes. Many digital platforms have been added to the Reserve Bank of India's Alert List for promoting unlicensed entities/ETPs, including through advertisements or claims to provide training/advisory services. Many of these sites also provide cryptocurrency trading without being registered with the appropriate authorities and in blatant violation of PMLA regulations.
However, while unlawful platforms continue to thrive, compliant platforms are being driven out of the market. Heavy taxatio obligations, and strict compliance requirements — including robust KYC, responsible gaming protocols, and payment regulations — make it increasingly difficult for legitimate operators to compete in an ecosystem where illegal players operate at scale with no accountability. This creates a skewed playing field in which law-abiding enterprises face the weight of enforcement failures, threatening the entire foundation of India's regulated digital economy. Furthermore, they endanger Indian citizens while draining the country's resources.
The government can no longer afford to treat these illegal websites as minor players. With billions in deposits and millions of users, they’re now a serious challenge to financial oversight. Their use of cryptocurrency isn’t just a coincidence—it’s a calculated move to hide illegal profits and stay under the radar.
