Crypto and Digital Asset Risks in Emerging Markets: Lessons from India and Australia

The digital asset landscape in emerging markets has become a battleground for regulatory innovation and enforcement, with India and Australia serving as case studies for how cross-border investors must navigate evolving frameworks. As global capital flows into crypto and tokenized assets, the interplay between regulatory clarity, enforcement rigor, and market dynamics has created both opportunities and risks. This analysis examines the regulatory trajectories of India and Australia, highlighting critical lessons for investors seeking to mitigate exposure in volatile, high-growth jurisdictions.

India: AAML Enforcement and the Shadow of PMLA

India's approach to digital assets has been marked by a dual strategy: stringent anti-money laundering (AML) enforcement and cautious taxation policies. Since March 2023, the Financial Intelligence Unit (FIU-IND) has mandated that all Virtual Digital Assets Service Providers (VDA SPs)-domestic and foreign- register under the Prevention of Money Laundering Act (PMLA) of 2002. This requirement extended to offshore platforms, leading to a landmark enforcement action in October 2025, where FIU-IND issued notices to 25 unregistered exchanges, including Huione, BitMex, and CEX.IO, for non-compliance with AML-CFT obligations. These platforms were ordered to delist their services in India, a move that disrupted billions in user assets and trading volumes. According to the government, the enforcement actions targeted unregistered exchanges operating in violation of AML regulations.

The Indian government's emphasis on AML compliance reflects a broader global trend toward financial crime prevention, but it also underscores the risks of regulatory overreach. For instance, the 30% tax on digital asset transactions, coupled with the absence of a legal tender framework, has created a fragmented ecosystem where compliance costs outweigh potential returns for many investors. As analysis shows, the combination of high taxation and enforcement actions has created significant barriers to market entry. Cross-border investors must now factor in not only the operational risks of platform delisting but also the reputational and legal consequences of associating with unregistered entities.

Australia: Formalizing Stablecoins and Institutional Access

In contrast, Australia has pursued a more structured path to regulatory integration. The Corporations Amendment (Digital Assets Framework) Bill 2025, introduced in 2025, seeks to classify stablecoins as "tokenised stored value facilities" under the Corporations Act 2001 (Cth), thereby extending consumer protections and licensing requirements to digital asset custodians. According to regulatory analysis, this move aligns with global efforts to address stablecoin risks, particularly after the U.S. Department of Justice's 2025 policy shift, which prioritized criminal enforcement over regulatory imposition. As reported, the U.S. DOJ's policy shift has created a precedent for aggressive enforcement actions worldwide.

Australia's Securities and Investments Authority (ASIC) has also updated its guidance, including a class no-action letter to ease the transition for digital asset businesses seeking licenses. According to legal analysis, this guidance aims to reduce compliance burdens for digital asset businesses. However, enforcement remains a key concern. AUSTRAC's 2024 actions against Entain Group and SkyCity Adelaide-resulting in a $67 million penalty-highlight the financial and reputational stakes of non-compliance with AML/CTF laws. As AUSTRAC reports, these enforcement actions demonstrate the significant penalties for regulatory violations. For cross-border investors, Australia's regulatory clarity offers a degree of predictability, but it also demands rigorous due diligence on custodial arrangements and compliance protocols.

Cross-Border Investment Risks: Due Diligence in a Fragmented Landscape

The experiences of India and Australia reveal two critical risks for cross-border digital asset investments: regulatory arbitrage and enforcement asymmetry.

1. Regulatory Arbitrage: While India's aggressive enforcement has driven platforms like Binance and Coinbase to re-enter the market post-registration, it has also created a parallel ecosystem of unregistered exchanges operating in legal gray areas. Similarly, Australia's stablecoin framework, though robust, may incentivize investors to seek jurisdictions with weaker oversight. Investors must assess whether a platform's compliance with one jurisdiction's rules (e.g., India's PMLA) translates to compliance in others, particularly where regulatory harmonization is lacking.

2. Enforcement Asymmetry: The U.S. DOJ's 2025 policy shift-focusing on criminal enforcement rather than regulatory imposition-has created a global precedent. However, jurisdictions like India and Australia continue to use enforcement actions to shape market behavior. For example, FIU-IND's 2025 crackdown on offshore platforms was not merely punitive but also a signal to align with global AML standards. As the enforcement action shows, these actions serve as a deterrent to non-compliance. Cross-border investors must anticipate how enforcement actions in one market could trigger regulatory domino effects in others, particularly in sectors like stablecoins, where tokenized value is inherently borderless.

Conclusion: Navigating the New Normal

For investors, the takeaway is clear: due diligence in emerging markets must extend beyond financial metrics to include granular analysis of regulatory frameworks and enforcement trends. In India, the risk of sudden delisting and high taxation demands a focus on registered, compliant platforms. In Australia, the emphasis on stablecoin oversight and AML compliance necessitates scrutiny of custodial infrastructure and institutional partnerships.

As the Global Crypto Policy Review & Outlook 2025/26 notes, regulatory clarity is no longer a distant goal but a dynamic process. Cross-border investors who adapt to this reality-by prioritizing compliance, diversifying jurisdictional exposure, and engaging with local regulatory bodies-will be better positioned to navigate the turbulence of digital asset markets in 2025 and beyond.