India Tightens KYC Regulations for Crypto User Onboarding
India’s Financial Intelligence Unit (FIU), the regulator responsible for setting anti-money laundering and know-your-customer regulations, has introduced new guidelines that strengthen the rules for onboarding users to crypto platforms. According to a report by The Times of India, these new rules will require regulated crypto exchanges to verify users through live selfie images and geo-location verification.
The live selfie images are verified using advanced software that tracks users’ eye and head movements to prevent AI deepfakes from being used to bypass the Know Your Customer (KYC) verification process. Additionally, exchanges must collect geolocation and IP addresses as well as an account creation timestamp at the time of account creation. This enhanced verification process aims to ensure the authenticity of users and prevent illicit activities on crypto platforms.
Enhanced Verification Process for Crypto Users
To comply with Anti-Money Laundering (AML) requirements, exchanges must verify users’ bank accounts by sending a small transaction to the account. Furthermore, to create an account with a registered crypto exchange, users are now required to submit additional government-issued photo IDs to exchanges and verify their email and mobile phone numbers. These measures are designed to provide an extra layer of security and transparency in the crypto onboarding process.
The new rules reflect the regulatory stance towards cryptocurrencies and digital assets in India, which has one of the largest addressable markets in the world. With a population of over 1.4 billion people, India’s growing interest in blockchain and cryptocurrency could spark a new wave of investment in the sector. The Indian government’s efforts to regulate the crypto market aim to balance innovation with consumer protection and anti-money laundering measures.
Indian Central Bank’s Stance on CBDCs and Stablecoins
The Indian central bank is urging countries to prioritize Central Bank Digital Currencies (CBDCs) over stablecoins. This stance is part of a broader discussion on the role of digital currencies in the financial system and the need for regulatory clarity. As the crypto market continues to evolve, governments and regulatory bodies are grappling with the challenges of balancing innovation with risk management and consumer protection.
India’s Tax Authority Views on Cryptocurrency
Indian Income Tax Department (ITD) officials recently met with parliamentary lawmakers and argued that cryptocurrencies and decentralized finance platforms undermine tax enforcement. The ITD officials cited the use of decentralized crypto exchanges, anonymous wallets, and crypto’s cross-border functionality as factors that make taxation difficult. They also noted that tax rules that change by jurisdiction complicate the ability to efficiently tax cryptocurrencies.
Under the Indian Income Tax Act, profits from cryptocurrency sales are taxed at 30%, with users only allowed to deduct cost basis from the profits. However, crypto traders in India cannot harvest tax losses, meaning they cannot use losses from other crypto sales to offset profits from other transactions. This tax treatment highlights the complexities of regulating cryptocurrencies and the need for clear guidelines on taxation.
For more information on the evolving regulatory landscape for cryptocurrencies, read the full article on Cointelegraph: https://cointelegraph.com/news/india-tighten-kyc-crypto-user-onboarding?utm_source=rss_feed&utm_medium=rss_tag_regulation&utm_campaign=rss_partner_inbound
