Since exchanges are not allowed to work in India, I don't agree with you on this one. Even if government issues some regulations regarding Bitcoin, it doesn't mean government can actually track all transactions done by traders. It can only give guidelines and it's up to traders whether they follow those or not. There will be very minute chances that government could actually catch the frauds in crytpo transactions.
If there is a regulation in India and if exchanges have to function in a proper manner they need to comply with all the KYC/AML regulation and even without any regulation all the exchanges were complying with those policies and if you are using fiat currency to purchase the coins then you need to use bank account and all the transactions are accounted for, so the only transaction that cannot have a record is face to face transaction and it has its own risk.