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India’s Financial Intelligence Unit (FIU) has initiated a fresh investigation into global crypto exchange Binance and WazirX. These investigations are a result of potential misuse of crypto transfers across wallets in cross-border transactions originating from Pakistan. This probe follows concerns that unregulated wallet activity might be exploited for illicit fund transfers near sensitive regions like Jammu and Kashmir.
What Sparked the Probe
Authorities in India are closely examining wallet-to-wallet crypto transfers allegedly sent from Indian accounts to addresses outside the country.
While no direct link has been officially established between the transactions and any criminal activity, the opaque nature of private wallets has prompted scrutiny. Indian law enforcement agencies, including the FIU and Enforcement Directorate (ED), are now monitoring certain blockchain paths for possible misuse.
Binance, which had recently resumed operations in India after resolving earlier compliance issues with a INR 18.8 crore fine (~$2.25 million or PKR 62.2 crore), is again under the regulatory spotlight. WazirX, once affiliated with Binance, is also being reviewed as part of the broader investigation.
Pakistan’s Crypto Framework Enters the Picture
On the other side, Pakistan has made notable progress in formalizing its crypto sector. In 2025, it launched the Pakistan Crypto Council and established the Virtual Assets Regulatory Authority (PVARA) to oversee digital assets and exchanges. These steps reflect Pakistan’s intention to bring clarity and structure to crypto regulation.
The government is also piloting a central bank digital currency (CBDC), with plans to monitor exchange operations and curb unregulated crypto flows. Binance and other global exchanges have expressed interest in working with Pakistan’s regulatory bodies as well.
Uncertainty, Volatility, and Crypto Transfers Risks
This investigation highlights the persistent crypto volatility and regulatory uncertainty. Such risks arise while operating across jurisdictions with differing compliance frameworks.
Indian authorities have flagged concerns about potential use of decentralized platforms for financing illicit activity. But so far, these remain areas of investigation rather than confirmed wrongdoing.
Regulatory experts warn that wallet anonymity and cross-border remittance loopholes pose real risks. This is especially true for India-Pakistan where geopolitical sensitivities are high. However, crypto advocates argue that misuse can happen in any financial system and that blanket suspicion may hinder innovation.
Crypto Transfers Risks A Global Issue, Not a Regional One
The current probe is part of a broader international trend toward tightening crypto regulation. Countries from the United States to the European Union are introducing rules aimed at improving transparency and exchange accountability.
Both India and Pakistan now find themselves adapting their financial monitoring frameworks to address challenges posed by rapid crypto adoption. For a better control, both countries need to find secure decentralized finance (DeFi) tools and safe digital wallet accessibility.
