India’s Crypto Rules Go Live: Selfies, Geo-Tagging & Penny Drops

by

So, deepfake tech is getting sharper, and India decides to tighten crypto rules. Fine, fine. But really, who invited all this security theater? 🙃

In a January update, the FIU-yes, the Financial Intelligence Unit-announced that simply uploading an ID isn’t enough anymore. As if that ever was. 😂

From January 12, crypto investors will face much stricter checks. Great, because what we needed was more paperwork to prove we exist, not just that we exist on paper.

Details of the FIU’s guidelines

Instead of merely uploading an ID, you’ll have to prove you’re physically present and real. Yes, real. No bots. 😅

This includes live selfie checks where you must perform actions like blinking, nodding, or turning your head-biometric verification, because apparently faces are still the best password. 🤖➡️🙂

Crypto exchanges will also be required to collect exact location details-latitude and longitude-IP addresses, and a “penny-drop” bank verification to confirm your identity and bank account match. Penny-drop, you say? It’s like a scavenger hunt for your money. 🕵️‍♂️💸

Remarking on the same, Nischal Shetty, Founder of WazirX, in an email to AMBCrypto, said,

“Steps like penny drop method, ID verification through selfies, etc were steps WazirX already had in place as part of the customer onboarding journey.”

By combining biometric checks with location tracking, authorities are creating a digital trail that’s extremely hard to fake. Great news for detectives and also for my paranoia. 🙃

Steps taken to prevent money laundering

Then, to comply with the Prevention of Money Laundering Act (PMLA), the FIU has introduced a strict three-level compliance system. Three levels, because two weren’t dramatic enough. 😬

Nearly three years after the first rules in 2023, these updates effectively turn crypto exchanges into closely monitored reporting entities. It’s like a reality show, but with more forms. 📑

While a user’s PAN card remains mandatory, it must now be supported by another government ID such as Aadhaar, a passport, or a Voter ID. Because why stop at one ID when you can have a collection? 📇

The key addition is the “live selfie” requirement, where users must perform actions like blinking or turning their head to prove they’re real and not an AI deepfake. Looks like we’re auditioning for CSI: Onboarding. 🕵️‍♀️

Echoing similar sentiments in the same email, Raj Karkara, COO, ZebPay, added,

“Measures such as liveness detection and geo-tagging during the onboarding process help strengthen user verification, improve transparency, and ensure greater accountability across platforms, aligning the industry with evolving global compliance expectations.”

How will ICO move ahead now?

Authorities have also increased scrutiny on Initial Coin Offerings (ICOs) and now classify them as high-risk activities. High-risk? Welcome to crypto roulette. 🎲

To ensure a clear audit trail, the report reinforces the “Travel Rule.”

Every crypto transfer must now include sender and recipient details, making cross-border anonymity far more difficult. So say goodbye to stealth transfers and hello to a paper trail with a passport photo. 🧭

The report also stresses long-term compliance and warns of serious penalties for lapses. Not a fan of consequences? Join the club. 🧯

Meanwhile, Virtual Digital Asset Service Providers (VDASPs) must conduct ongoing due diligence, including KYC updates every six months for high-risk clients. Real-time screening against domestic and global sanctions lists-it’s like a quarterly performance review for your wallet. 😅

They must also screen users in real time against domestic and global sanctions lists.

Lastly, exchanges must store all transaction and identity records for at least five years. Nothing says privacy like a five-year archive of your crypto life. 📂

These steps follow FIU imposing ₹28 crore in fines last fiscal year, signaling the government’s intent to crack down on digital arrest scams and hawala-style crypto transactions. Hmm, nothing suspicious there. 🙄

What’s more?

The timing coincides with Economic Affairs Secretary Ajay Seth noting that as other major jurisdictions soften their stances on digital assets, India must recalibrate its long-delayed discussion paper. Yep, we’re not waiting for the world to circle the wagons. 🐎

He noted,

“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of the usage, their acceptance, where do they see the importance of crypto assets.”

Thus, by implementing some of the most stringent onboarding and reporting standards globally, India is trying to secure its borders without waiting for a global consensus. The nerve! 🤯

Final Thoughts

  • By mandating live selfies, geo-tagging, and penny-drop checks, authorities are closing long-standing loopholes exploited by deepfakes and anonymous wallets.
  • Long-term success will depend on how securely exchanges handle vast amounts of sensitive user data.

Read More

2026-01-12 14:14