India”s Ministry of Home Affairs (MHA) has launched the “PRAHAAR” initiative, a comprehensive strategy aimed at countering the use of cryptocurrencies in terror financing. Announced on February 23, 2026, this plan emphasizes the risks associated with crypto wallets, which terrorist organizations exploit for anonymous financial transactions.
The MHA”s strategy underscores the growing trend of terrorist groups utilizing digital currencies to move funds discreetly, raising significant alarm regarding the intersection of digital finance and illegal activities. By leveraging the internet, these groups not only spread propaganda but also increasingly rely on social media and messaging applications to facilitate funding.
As articulated in the PRAHAAR strategy, cryptocurrencies enable seamless cross-border transactions without revealing the identities of the parties involved. This anonymity presents challenges for law enforcement as traditional Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols often do not apply.
The MHA highlights the lessons learned from past incidents, such as the 2023 National Investigation Agency (NIA) case involving an ISIS-inspired network. The investigation revealed a sophisticated operation where funds were funneled through a Canara Bank account, converted into Tron (TRX) tokens via the WazirX exchange, and subsequently sent to entities abroad, illustrating the potential for rapid and untraceable money movement.
In response to the Pahalgam terror attack in July 2025, Indian authorities have intensified scrutiny of cryptocurrency exchanges. The Financial Intelligence Unit (FIU) has initiated investigations into major platforms, including Binance and WazirX, focusing on suspicious transactions linked to wallets connected to regions such as Pakistan and Syria. Furthermore, the Enforcement Directorate (ED) has frozen accounts tied to Binance due to violations of the Foreign Exchange Management Act (FEMA).
Experts warn that while regulatory measures are crucial for national security, they must strike a balance to foster innovation within the domestic crypto sector. Romy Johnson from Toofaan Army noted the fragmented regulatory landscape, arguing that reliance on outdated laws like FEMA and UAPA may stifle legitimate activity and push users towards unregulated platforms.
The PRAHAAR initiative sends a clear message: as India enhances its digital economy, the government is poised to monitor cryptocurrency transactions more closely, demanding real-time enforcement and international cooperation. The challenge remains in finding the right balance between preventing misuse of digital currencies and allowing innovation to thrive. Only time will reveal whether these measures can effectively curb illicit crypto activities while supporting legitimate uses.
