India is hardening its stance on crypto oversight just as other countries ease up — rolling out some of the strictest onboarding and reporting rules the sector has seen. What changed - On Jan. 8 the Financial Intelligence Unit (FIU) announced new protocols that take effect Jan. 12, declaring traditional ID uploads insufficient in an era of increasingly sophisticated deepfakes. - Exchanges and other Virtual Digital Asset Service Providers (VDASPs) must now combine biometric “liveness” checks (live selfies with actions such as blinking or head turns) with geolocation and device data to prove users are physically present and real. - Required data collection expands to precise location details (latitude/longitude), IP addresses, and mandatory “penny-drop” bank verification to match a user’s identity to their bank account. Why the shift Officials point to the rise of AI-generated deepfakes and cross-border anonymity risks. By pairing biometric verification with geo-tagging and device information, regulators aim to create a tamper-resistant digital trail that’s far harder to fake. New compliance architecture - The FIU has layered these measures into a strict three-tier compliance framework under the Prevention of Money Laundering Act (PMLA), effectively making exchanges tightly monitored reporting entities. - PAN remains mandatory, but must now be backed by an additional government ID (Aadhaar, passport, or Voter ID). - Ongoing due diligence requirements include KYC refreshes every six months for high-risk clients and continuous screening against domestic and global sanctions lists. - All transaction and identity records must be retained for at least five years. Transfers, ICOs and penalties - The “Travel Rule” is reinforced: every crypto transfer must include sender and recipient details, reducing cross-border anonymity. - Initial Coin Offerings (ICOs) are now designated high-risk activities and subject to heightened scrutiny. - The FIU warned of significant penalties for noncompliance; last fiscal year it imposed fines totaling ₹28 crore as part of a broader crackdown on digital arrest scams and hawala-style crypto flows. Industry response Executives at major Indian exchanges said many of these measures were already in place. Nischal Shetty, founder of WazirX, told AMBCrypto that WazirX had already implemented penny-drop verification and ID checks via selfies during onboarding. Raj Karkara, COO of ZebPay, said liveness detection and geo-tagging strengthen verification, transparency and accountability, and align India’s industry with evolving global compliance expectations. Bigger picture The regulatory push comes as global approaches to crypto diverge. Economic Affairs Secretary Ajay Seth noted that several jurisdictions have softened their stances, prompting India to recalibrate its long-delayed discussion paper and move unilaterally to tighten controls at home. In short, India appears to be securing its own regulatory borders rather than waiting for international consensus. Bottom line From Jan. 12, Indian crypto users should expect far more intrusive onboarding and tighter ongoing monitoring, while exchanges will face heavier recordkeeping and reporting duties. The measures aim to curb fraud and money laundering but also place India among the world’s most stringent crypto compliance regimes. Source: AMBCrypto. This content is informational and not investment advice; trading or investing in cryptocurrencies carries high risk — do your own research. © 2026 AMBCrypto Read more AI-generated news on: undefined/news