India’s Financial Intelligence Unit (FIU) tightens real-name verification for virtual assets…mandates live selfies and location verification

India’s Financial Intelligence Unit (FIU·Financial Intelligence Unit) has issued new guidelines that significantly tighten know-your-customer (KYC) rules for users of virtual asset platforms.

According to a report by The Times of India, cited by Cointelegraph on the 12th (local time), under the Indian authorities’ new rules, regulated virtual asset exchanges must obtain users’ real-time selfie images and, via software that tracks eye and head movements, block identity theft using AI deepfakes. They must also collect and retain location data at the time of account creation along with IP addresses and timestamps.

In addition, exchanges are required to undergo a verification process using small-value deposits to confirm the existence of users’ bank accounts, and to request submission of additional government-issued photo identification. Email and mobile phone number verification were also included as mandatory requirements.

With India holding one of the world’s largest potential markets with a population of more than 1.4 billion, some assessments suggest that greater regulatory clarity could, over the long term, serve as a prerequisite for broader participation in the virtual asset market.

Meanwhile, India’s tax authority, the Income Tax Department (ITD·Income Tax Department), recently claimed in a meeting with lawmakers that virtual assets and decentralized finance (DeFi) are being used as tools that weaken tax enforcement. The ITD noted that taxation is difficult due to anonymous wallets, decentralized exchanges, and the cross-border transfer characteristics, and stressed that under India’s current Income Tax Act, capital gains from virtual asset trading are subject to a flat tax rate of 30% and loss offsets are not permitted.