India is tightening its grip on the cryptocurrency market with the introduction of mandatory live selfies and geo-tagging for crypto users. The Financial Intelligence Unit (FIU), operating under the Union Finance Ministry, issued these stringent new Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols for cryptocurrency exchanges on January 8, 2026.
These updated guidelines classify crypto exchanges as Virtual Digital Asset (VDA) service providers, requiring them to go beyond simple document uploads during user onboarding. The aim is to curb illegal activities and enhance transparency in the digital asset market.
Under the new regulations, users must take a "live selfie" using software that can verify their presence through methods like eye-blinking or head movement. This measure is designed to prevent the use of static photos or deepfakes. Cryptocurrency exchanges are now required to record the precise latitude and longitude, date, timestamp, and IP address from which a user initiates account creation.
Further strengthening the verification process, the "penny-drop" method is now mandatory. This involves processing a nominal transaction of approximately Re 1 to confirm the bank account's validity and ownership.
In addition to submitting a Permanent Account Number (PAN), users must also provide a secondary ID, such as a Passport, Aadhaar, or Voter ID, along with OTP verification for their email ID and phone number. The FIU's tough stance is particularly aimed at discouraging Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs), citing their lack of economic justification and high risk.
As the single-point regulator for cryptocurrency exchanges in India under the Prevention of Money Laundering Act (PMLA), the FIU requires all exchanges to register as reporting entities. These entities must submit regular reports on suspicious transactions and maintain detailed client records. These measures signify a major step towards regulating the burgeoning crypto market in India and align with global efforts to combat money laundering and other illicit activities involving digital assets.
