New KYC rules mandated for crypto exchange users in India
If you invest or trade in Bitcoin, Ethereum, or any other cryptocurrency in India, this news is crucial for you. India’s Financial Intelligence Unit (FIU) has significantly tightened regulations for crypto exchanges. Opening or operating a crypto account is no longer as easy as it used to be.
What has changed in the new rules?
The government has implemented five major changes to prevent money laundering and fraud, which every investor needs to know:
Live Selfie Mandatory: Uploading old photos will no longer suffice. To prevent deepfake fraud, you will now have to take a “live selfie” in front of the camera. The system will prompt you to blink or nod your head to confirm that you are a real person and are physically present.
Geo-tagging: Your location will be tracked when creating an account or conducting transactions. Exchanges will record your precise latitude and longitude and IP address.
Strict Bank Account Verification: Simply providing bank details will not be enough. A “penny drop verification” (a small transaction of ₹1) is now mandatory to prove account ownership.
Two ID Proofs: A PAN card alone is no longer sufficient. You will also need to provide another government-issued document such as an Aadhaar card, passport, or voter ID.
OTP Verification: Separate OTP verification for both email and mobile number is now mandatory.
Why were these steps taken?
The FIU has now classified crypto exchanges as “Virtual Digital Asset” (VDA) service providers. The primary objective is to curb illegal activities, terror financing, and cyber fraud.
