Dishita Malvania | Crypto Times
24 Feb 2026
India’s “PRAHAAR” strategy highlights crypto wallets’ role in terror financing, citing past cases and ongoing enforcement by FIU, ED, and SIA.
India’s Ministry of Home Affairs (MHA) has unveiled its latest counter-terror plan, “PRAHAAR”, putting the spotlight on cryptocurrencies and blockchain. Released on February 23, 2026, the strategy warns that terrorist groups are increasingly using crypto wallets to move money anonymously, raising new concerns about digital finance being exploited for illegal activities.
The strategy is part of a larger effort to criminalize all terrorist acts, cut off access to funds, weapons, and safe havens, and disrupt terror networks using legal and technological measures. But what stands out in the digital age is the emphasis on crypto and blockchain.
The MHA points out that terrorists are using the internet more and more, not just for spreading propaganda or communicating, but significantly also for raising and moving funds. They are increasingly relying on social media, messaging apps, and crypto wallets to transfer money while staying under the radar.
Crypto wallets: A means for anonymous transfers
According to “PRAHAAR,” digital assets make it possible to move money across borders anonymously. Unlike regular banks, cryptocurrencies let funds move without showing the real identity of the sender or receiver. They often bypass standard anti-money laundering (AML) and know your customer (KYC) checks, which makes them an easy tool for those trying to finance illegal activities. The strategy makes it clear: while blockchain is transparent in theory, in practice, the identities behind wallets can remain hidden, giving extremists a loophole to move money with minimal detection.
Lessons from the past: The WazirX case and “crypto hawala”
Historical cases are a key part of how the strategy was developed. One important example is the 2023 National Investigation Agency (NIA) investigation into an ISIS-inspired module led by Mohammad Mohsin Ahmad, who was arrested at Delhi’s Batla House.
The charge sheet and investigation details show how the group operated:
Transaction Path: Money collected from about 20 entities was first deposited into a Canara Bank account, then transferred to a WazirX exchange account, converted into Tron (TRX) tokens, and finally sent to a Syria-based entity called “Ummimmarah,” as per an Economic Times report.
Modus Operandi: Authorities call this “crypto hawala”, an informal system of moving funds using digital assets to get around traditional banking channels.
Scale and Efficiency: The accused raised funds in under two years, showing how quickly digital assets can transfer money across borders.
Separately, in June 2021, the Enforcement Directorate (ED) issued a show-cause notice to WazirX over ₹2,790 crore in transactions linked to money laundering through a Chinese betting app.
These cases make it clear that cryptocurrencies can move money fast and remain largely untraceable, which makes tracking and enforcement far more difficult than with regular banks.
Ongoing investigations and enforcement
After the July 2025 Pahalgam terror attack, the government stepped up monitoring of crypto transactions.
Reports from the South Asia Terrorism Portal (SATP) show the following actions:
The Financial Intelligence Unit (FIU) began investigating major exchanges like Binance and WazirX, following suspicious TRX transactions connected to wallets in Pakistan, Jammu & Kashmir, and Syria.
The ED froze accounts linked to Binance for violations of the Foreign Exchange Management Act (FEMA).
The State Investigation Agency (SIA) carried out raids under the Unlawful Activities Prevention Act (UAPA) targeting wallets suspected of being used to fund terrorist activities.
These measures echo earlier actions, including the ED’s 2021 scrutiny of WazirX and other exchanges. The recurring theme: crypto allows funds to move fast, across borders, often without leaving obvious paper trails.
Analysis: Crypto’s double-edged sword
India’s focus on preventing terror financing through cryptocurrencies is necessary, but enforcement alone will not solve the problem.
Romy Johnson (Toofaan Army), who was actively involved in monitoring the WazirX case on X, stated: “Today, millions of Indians use digital assets, yet the regulatory environment remains fragmented and reactive. Relying on legacy laws like FEMA or UAPA creates uncertainty, pushes activity toward foreign or unregulated platforms, and ultimately reduces transparency.”
Experts note that blockchain is inherently pseudonymous, which is exactly what makes it attractive to terrorist organizations. While every transaction on the blockchain leaves a record, figuring out who is actually behind a wallet is not simple. It takes detailed forensic work and specialized tools to trace the real person controlling it.
The “PRAHAAR” plan makes it clear that India wants to tighten rules around Virtual Asset Service Providers (VASPs) and keep a close eye on on-chain activity as it happens. The strategy also points out that international cooperation is crucial, since terrorist funding rarely stays confined to one country. Money can move across borders quickly, so working with other nations is essential.
The challenge is obvious: how can India encourage financial innovation while still keeping the country safe? The plan aims to prevent misuse of digital assets without stopping regular crypto activities, but achieving that balance is not easy. Cryptocurrencies are designed to move fast and operate without a central authority—the very things that make them useful also make them hard for authorities to track.
Looking ahead
With “PRAHAAR” now in place, crypto exchanges, wallets, and digital assets are being watched much more closely than before. The government is making it clear that just seeing transactions on the blockchain isn’t enough. Authorities now need active enforcement, international cooperation, and real-time monitoring.
As India pushes forward with its digital economy, the strategy shows a clear change in approach: the country wants to encourage innovation while cracking down on abuse. The big question is whether regulators can actually stop illegal crypto flows without slowing down legitimate use. Only time will tell.