Summary of this article
FIU mandates live selfie, geo-tagging, and strict KYC for crypto.
Enhanced AML rules aim to prevent fraud, financial crimes effectively.
Experts say regulations boost trust, legitimacy, and institutional participation.
India’s Financial Intelligence Unit (FIU) has introduced new guidelines for cryptocurrency exchanges to bring in stricter compliance measures. The new guidelines represent a regulatory shift in the way digital assets are maintained and monitored throughout the country.
FIU Tightens Oversight on Crypto Exchanges
Under the new framework, crypto exchanges have been classified as virtual digital asset service providers and will be required to follow tighter onboarding norms. Users will have to undergo live selfie verification with liveness detection, while exchanges must capture geo-location data, IP address and timestamps during account creation, according to a PTI report. The rules also mandate a Re 1 penny-drop bank verification, permanent account number (PAN) submission, an additional government-issued ID, and OTP-based verification for email and mobile numbers.
FIU is India’s central agency tasked with preventing financial crimes. It is responsible for overseeing crypto exchanges that enforces anti-money laundering (AML) regulations, and monitoring transactions in order to combat fraud and unlawful activity.
The guidelines also lay down stricter requirement monitoring for exchanges.
Customer identification and transaction information must be kept for at least five years, with know-your customer (KYC) assessments conducted more frequently for high-risk individuals. Enhanced due diligence has also been prescribed for politically exposed persons and entities linked to sensitive or high-risk jurisdictions.
In addition, FIU has cautioned exchanges against facilitating activities that can obscure transaction trails. Initial coin offerings, initial token offerings, and anonymity-enhancing tools, such as tumblers and processors have all been highlighted as posing increased risk. Accordingly, exchanges will have to implement protections and greater risk mitigation procedures.
Experts Weigh In on FIU’s Updated Crypto Guidelines
Crypto experts have weighed in on the implications of the new FIU guidelines for India’s cryptocurrency sector.
Sathvik Vishwanath, co-founder & CEO, Unocoin said that the AML and KYC framework introduced by the FIU indicates a major shift for crypto users. He said: “The rules mandate deeper identity verification, including biometric checks, location validation, and closer scrutiny of transactions, which may lead to longer onboarding, reduced anonymity, and tighter monitoring of fund movements.”
He added: “At the same time, these changes bring greater legitimacy to crypto participation, improve safeguards against financial crime, and may encourage institutional confidence, contributing to a more regulated and resilient crypto ecosystem in India.”
Edul Patel, CEO of Mudrex, said, “We welcome the FIU-IND’s updated guidelines as a positive and timely step for India’s crypto ecosystem.” He added that for investors, this move significantly strengthens trust, transparency, and accountability, adding that it highlights the need for a comprehensive regulatory framework that protects users and supports the mature growth of India’s crypto sector.
Avinash Shekhar, co-founder and CEO, Pi42 said that the introduction of enhanced AML and KYC requirements signals a decisive step toward formalising India’s digital asset ecosystem.
“Clear compliance standards will strengthen identity verification, build confidence, and encourage broader institutional participation. They will provide certainty to businesses and investors which will bring activity into properly governed channels and support long-term market growth,” he added.
