India has rolled out tougher onboarding rules for cryptocurrency exchanges, signaling a major shift in how users sign up on trading platforms. Under new anti-money-laundering guidelines from the Financial Intelligence Unit, or FIU, all crypto exchanges operating in the country must now verify users through live selfies with liveness detection and capture their real-time geographic location during registration.
The rules took effect immediately after their release on January 8, 2026. Regulators say the move aims to strengthen Know Your Customer standards and curb misuse of digital assets for illegal activities.
What the New KYC Rules Require
The updated framework goes beyond uploading identity documents. Instead, it focuses on real-time authentication to ensure that users are genuine and physically present during onboarding.
Crypto exchanges in India must now:
- Capture a live selfie using liveness detection technology to prevent spoofing.
- Record latitude and longitude data from the user’s device at sign-up.
- Log timestamps and IP addresses to confirm onboarding within approved locations.
- Collect verified identity and address documents such as Aadhaar, passport, or driver’s license.
- Confirm bank account ownership through a penny-drop verification process.
Furthermore, these steps apply to both new users and, in many cases, existing accounts that require revalidation.
Impact on Exchanges and Crypto Users
Industry experts describe the rules as one of the strictest compliance regimes for crypto markets worldwide. Therefore, many exchanges have already begun upgrading their onboarding systems and privacy controls to stay compliant.
For everyday users, the process may feel similar to opening a bank account online. While onboarding could take slightly longer, regulators argue that stronger checks will reduce fraud and improve trust across platforms.
Broader Push to Reduce Risk in Digital Assets
In addition to identity verification, the FIU has urged platforms to avoid offering high-risk crypto products. These include privacy-focused tokens, mixers, tumblers, and even token launches such as ICOs. Officials believe these products often enable misuse and obscure transaction trails.
However, some critics worry about user privacy and increased friction. As a result, industry groups are expected to engage with regulators to refine how these rules work in practice.
