The cryptocurrency landscape in India continues to be uncertain, with the country yet to establish a comprehensive regulatory framework for digital assets. However, recent developments suggest that India is taking steps towards tighter oversight of the cryptocurrency industry.
The Financial Intelligence Unit of India (FIU-IND) has issued a directive requiring all cryptocurrency exchanges operating in the country to update their users’ Know Your Customer (KYC) details by June 30, 2025. This move is part of India’s efforts to enhance crypto regulation and ensure tax compliance.
The reason behind the FIU’s decision to update KYC rules stems from a recent investigation that uncovered non-compliance with the 1% Tax Deducted at Source (TDS) regulations for crypto transactions. To address this issue, crypto exchanges are now mandated to reverify and update user accounts to prevent violations of the Prevention of Money Laundering Act.
With the June 30 deadline looming, crypto exchanges must prompt users to reverify their KYC details, including submitting crucial information like their Permanent Account Number (PAN). Non-compliance could result in regulatory action being taken against the exchanges.
Major global and local exchanges, such as Binance, have already started informing users about the KYC re-verification process. The Bharat Web3 Association, a local blockchain advocacy group, has welcomed the FIU-IND’s directive, citing improved transparency and security in the industry.
CEO of Mudrex, Edul Patel, stressed the importance of educating users on tax obligations in addition to KYC compliance, underscoring a growing emphasis on responsible crypto usage.
While the FIU’s actions are a step in the right direction, India’s overall regulatory framework for cryptocurrencies is still a work in progress. The Reserve Bank of India is reportedly drafting a discussion paper that will outline the government’s approach to regulating the crypto sector.
Industry experts, like Sudhakar Lakshmanaraja, see the FIU’s move as a positive indication that India is committed to establishing a clear and structured regulatory environment for cryptocurrencies.
As India navigates its way through the crypto regulatory landscape, it is essential for users and exchanges to stay informed and compliant with the evolving regulations to ensure a secure and transparent crypto market.