India tightens KYC rules for crypto exchanges with live selfies and geolocation

India’s Financial Intelligence Unit (FIU) has issued new guidelines tightening user onboarding requirements for regulated crypto platforms, reinforcing anti-money laundering (AML) and know-your-customer (KYC) standards.

Under the new rules, exchanges must verify users through live selfie images, using software that tracks eye and head movements to prevent AI deepfake abuse. Platforms are also required to collect geolocation data, IP addresses, and timestamps at account creation.

Exchanges must additionally verify user bank accounts by sending a small test transaction, collect extra government-issued photo ID, and require email and mobile number verification before accounts can be activated.

The move reflects India’s increasingly strict stance toward crypto and digital assets. With a population exceeding 1.4 billion, broader onchain adoption in India could still represent a major growth opportunity for the global crypto market.

Separately, officials from India’s Income Tax Department (ITD) told lawmakers that crypto and decentralized finance undermine tax enforcement due to anonymous wallets, decentralized exchanges, and cross-border transactions. Under current law, crypto gains are taxed at 30%, with only cost basis deductions allowed and no offsetting of losses across trades.