New compliance measures reflect growing regulatory and tax enforcement concerns
India has tightened compliance standards for crypto platforms by introducing stricter know-your-customer requirements for user onboarding. The move signals an increasingly firm regulatory stance toward digital assets, as authorities argue that cryptocurrencies and permissionless blockchain systems pose challenges to tax collection and financial oversight.
New KYC Measures Mandated for Crypto Exchanges
India’s Financial Intelligence Unit has issued updated guidelines requiring regulated crypto platforms to adopt enhanced identity verification procedures. Under the new rules, users must complete live selfie verification using software that tracks eye and head movements to prevent AI-generated deepfake attacks. This measure aims to close loopholes in identity fraud during account creation.
In addition, exchanges are now required to collect geolocation data, IP addresses, and timestamps at the time of onboarding. User bank accounts must also be verified through a small test transaction to meet anti-money laundering standards. Applicants must submit additional government-issued photo identification and verify both their email address and mobile number before gaining access to trading services.
ITD officials said that;
India’s tax authorities have repeatedly warned lawmakers that decentralized exchanges, anonymous wallets, and cross-border crypto transfers complicate tax enforcement. Under current tax law, profits from crypto transactions are taxed at a flat 30%, with no allowance for offsetting losses across trades.
With a population exceeding 1.4 billion, India represents one of the world’s largest potential crypto markets. However, these tighter rules suggest that future growth will be closely tied to strict regulatory compliance and enhanced transparency rather than unrestricted access.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.