India Tightens Crypto KYC Norms: The Benefits, Risks, and What Users Should Know

Core Insights - India's crypto market is entering a more regulated phase as authorities aim to close gaps in oversight, with the Financial Intelligence Unit (FIU-IND) introducing stricter KYC and AML rules for crypto platforms [1][3][7] Regulatory Changes - The new KYC norms, effective from January 8, 2024, apply to all platforms offering crypto-related services in India and build on earlier guidelines from March 2023 [3] - Key changes include mandatory live selfie verification, geo-tagging during onboarding, and OTP verification for email and mobile numbers [4] - Users must provide detailed personal information, including income, occupation, bank account details, PAN, and a secondary identification document [4] Compliance Requirements - Exchanges must conduct "penny-drop" bank verification, perform periodic KYC updates every six months for high-risk users, and annually for others [5] - Platforms must register with FIU-IND, undergo mandatory cybersecurity audits, and appoint a designated director for AML compliance [5] - Annual risk assessments and monthly suspicious transaction reports to authorities are required [6] Impact on the Industry - The stricter regulations may increase costs and compliance burdens, potentially stifling smaller platforms and innovation in the sector [7] - User onboarding friction could reduce adoption, but the measures align India with global AML standards for long-term stability [7]