Core Insights - India is tightening oversight of cryptocurrency platforms to curb illicit activities through stricter identity and monitoring requirements [1][2] Regulatory Changes - Crypto exchanges are now classified as Virtual Digital Asset (VDA) service providers and must implement enhanced Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures [2][8] - New rules mandate live identity verification and stronger Client Due Diligence (CDD) processes to address concerns about the speed and pseudonymous nature of crypto transactions [3][8] Customer Identification Requirements - Exchanges must identify customers using reliable sources and collect a broader set of technical identifiers, including IP addresses, geolocation data, device IDs, wallet addresses, and transaction hashes [4] - Platforms are required to collect and verify a customer's Permanent Account Number (PAN) before allowing any VDA-related activity [4][5] Bank Account Verification - A "penny-drop" mechanism is now required to confirm ownership and operational status of linked bank accounts [5] - Users must provide a secondary government-issued ID and complete one-time password verification for registered email addresses and phone numbers [5] Industry Response - Industry participants have largely welcomed the new measures, indicating that they clarify compliance and reduce enforcement uncertainty [6][8] - The updated framework is seen as beneficial in removing ambiguity and ensuring consistent enforcement across platforms [6] Fundraising Regulations - The Financial Intelligence Unit (FIU) aims to discourage Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs) due to concerns over economic rationale, disclosure standards, and risk mitigation [7]