Investing in Cryptocurrency? Live Selfie and Location Tracking Now Mandatory Under Stricter Rules

Investors in cryptocurrency will now face stricter verification requirements, as India’s Financial Intelligence Unit (FIU) tightens regulations on crypto platforms. The move is aimed at preventing money laundering, illegal transactions, and financing of terrorism, under the country’s Anti-Money Laundering (AML) and Know Your Customer (KYC) framework.

New Guidelines for Crypto Platforms

On January 8, the FIU issued updated directives, classifying crypto exchanges as Virtual Digital Asset (VDA) service providers. This means that platforms can no longer rely solely on document uploads. They must now perform live verification of customer identities and locations before allowing transactions.

All reporting entities (REs) are required to adopt robust Client Due Diligence (CDD) procedures to verify the identities of users. This is particularly necessary because VDA transactions are often instant and anonymous, increasing the risk of misuse. Customer identity must now be confirmed through reliable and independent sources, in addition to the information provided by the customer.

Mandatory Data Collection

Platforms must now collect additional data for verification and monitoring purposes, including:

• IP address with timestamp
• Geo-location
• Device ID
• VDA wallet address
• Transaction hash

Furthermore, a customer’s Permanent Account Number (PAN) must be obtained and verified, regardless of whether it is for onboarding or any other VDA-related transaction.

Additional Verification Requirements

• Customers’ bank accounts must be verified using a “penny-drop” mechanism, ensuring the account is active and owned by the customer.
• In addition to PAN, another official ID such as passport, Aadhaar, or voter ID must be submitted.
• Email and phone number verification via OTP (One-Time Password) is also mandatory.

Industry Response

Edul Patel, CEO of Mudrex, welcomed the updated FIU guidelines, calling them a “positive and timely step for India’s crypto ecosystem.” WazirX founder Nischal Shetty noted that major Indian exchanges were already following global standards, and the new rules mainly formalize existing practices, now clearly defined by the FIU.