The growth of cryptocurrencies has revolutionized the international financial system by providing faster transactions, new investment, and cross-border payments. Growth has not been without challenges, especially in holding illegal financial flows. Anti-Money Laundering (AML) rules in the virtual currency industry are thus designed to safeguard the industry against illicit uses by embedding transparency and confidence. As nations globally, including India, keep streamlining their systems, the nexus of innovation and regulation is more and more becoming the hallmark of the digital economy.