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India’s Financial Intelligence Unit (FIU) has introduced new strict guidelines for cryptocurrency platforms to strengthen KYC and AML compliance.
Under the new rules, crypto exchanges dealing in major digital assets such as Bitcoin (BTC) and Ethereum (ETH) must ensure:
Live selfie verification with eye and head movement tracking to prevent AI-based fraud
Collection of geolocation data, IP address, and timestamp during account creation
Bank account verification through a small test transaction
Submission of additional government-issued photo ID
Mandatory email and mobile number verification
In addition, the Indian government has reaffirmed that:
Crypto profits are taxed at a flat 30% rate
Losses cannot be adjusted against profits
These measures aim to improve transparency, reduce financial crime, and bring stronger oversight to the rapidly growing crypto market in India.
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India’s tax authorities have raised fresh concerns over the regulation and enforcement of cryptocurrencies, aligning closely with the Reserve Bank of India’s (RBI) long-standing cautious stance on virtual digitalassets (VDAs). The remarks come ahead of the Union Budget presentation, signaling that crypto oversight remains a sensitive and unresolved policy issue.
Officials from the Income Tax Department highlighted the practical challenges involved in tracking crypto transactions, particularly those conducted through overseas exchanges and decentralized platforms. The pseudonymous nature of blockchain transactions, combined with rapid innovation in the sector, has made monitoring, valuation, and compliance enforcement increasingly complex.
Despite the introduction of a 30% tax on crypto gains and a 1% tax deducted at source (TDS) on transactions, authorities believe gaps remain in reporting accuracy and investor disclosure. Tax officials reportedly emphasized the need for stronger data-sharing mechanisms, clearer regulations, and enhanced coordination with global agencies to prevent tax evasion and illicit financial flows.
The RBI has consistently warned about the macroeconomic and financial stability risks posed by private cryptocurrencies, including capital flight and consumer protection concerns. While the government has stopped short of imposing an outright ban, the convergence of views between the central bank and tax authorities suggests continued regulatory tightening rather than liberalization.
As India prepares its next Union Budget, market participants are closely watching for signals on whether the government will clarify its long-term crypto policy, introduce stricter compliance measures, or maintain the current taxation framework. For now, the government’s messaging indicates that caution and control will remain central to India’s approach toward digital assets.

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Key Points
India has officially registered 49 cryptocurrency exchanges under the Financial Intelligence Unit (FIU), tightening anti–money laundering (AML) rules to combat fraud, scams, and terrorism financing within the crypto sector.
Crypto platforms have already faced 28 million INR in penalties as India enforces strict compliance obligations such as wallet monitoring, AML reporting, and risk assessments to strengthen market oversight.

India sharpens regulation of the crypto sector
India is ramping up regulatory oversight of digital assets. During fiscal year 2024–2025, 49 crypto exchanges were formally registered with the FIU, marking a major step in the government’s effort to strengthen AML and counter-terrorism financing (CFT) controls as concerns grow over misuse of cryptocurrencies for illicit activities.

FIU review reveals high-risk crypto activity
According to FIU’s annual report for FY 2024–25, accessed by PTI, the registrations followed an extensive review of Suspicious Transaction Reports (STRs) submitted by crypto platforms.
The FIU discovered that crypto assets were repeatedly used for high-risk and criminal activities, including:
fraud and financial scamsonline gambling and unreported transfersmisuse between usersincidents linked to darknet servicesterrorism financingcirculation of child sexual abuse material
The findings highlight how easily crypto anonymity can be exploited without strict oversight.
Out of the 49 registered platforms, 45 are based in India, while four operate from abroad. Unlike countries where multiple regulators oversee crypto, India has designated a single authority — the FIU under the Ministry of Finance — to monitor exchanges.
CoinDCX CEO Sumit Gupta commented:
“India’s crypto market is far more competitive than most people realize. Healthy competition is good for the ecosystem because it drives innovation.”

Crypto exchanges must comply with strict AML obligations
Under Indian law, cryptocurrency exchanges are classified as Virtual Digital Asset (VDA) service providers and, since 2023, fall under the Prevention of Money Laundering Act (PMLA).
They are required to:
AML Compliance Requirements
file Suspicious Transaction Reports (STR)identify wallet ownersmonitor token fundraising activities (such as IPO-style token offerings)track transfers between hosted and unhosted wallets
Post-registration obligations
Exchanges must also:
disclose their banking relationshipsappoint compliance officersperform internal auditsimplement risk-based customer controlsscreen transactions against sanctions listscomplete regular risk assessments and share all data with the FIU
These requirements create a comprehensive surveillance framework for detecting suspicious activities in the crypto ecosystem.

FIU enforcement and penalties: India cracks down
The FIU has actively enforced these rules. During FY 2024–2025, crypto exchanges that failed to meet AML obligations were fined a combined 28 million INR.
The FIU also identified regional hotspots for suspicious crypto activity and mapped digital assets frequently involved in illegal transactions — strengthening India’s national intelligence and monitoring framework.

India strengthens its regulatory stance
India recognizes the potential of cryptocurrencies to transform finance and wealth creation. However, authorities remain cautious due to the rapid speed, global reach, and pseudonymous nature of crypto transactions, which pose significant risks.
In addition to AML rules, the government has intensified oversight through:
stricter tax policieswithholding tax (TDS) requirementsFIU-led monitoring
India’s approach is clear: support innovation but prevent misuse of digital assets for crime.

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