According to Cointelegraph, India's Financial Intelligence Unit (FIU) has introduced new guidelines aimed at strengthening the onboarding process for users on cryptocurrency platforms. These regulations require crypto exchanges to implement more stringent verification methods, including live selfie pictures and geographic location checks. The Times of India reports that the selfie verification process involves software that monitors users' eye and head movements to prevent AI deep fakes from circumventing the know-your-customer (KYC) protocols.
Additionally, exchanges are mandated to collect geolocation data and IP addresses during account creation, along with a timestamp of the account setup. To comply with anti-money laundering (AML) requirements, exchanges must verify user bank accounts by initiating a small transaction. Users are also required to provide additional government-issued photo identification and verify their email and mobile numbers to establish an account with a registered crypto exchange.
These measures reflect India's regulatory approach to cryptocurrencies and digital assets, considering the country's vast market potential with a population exceeding 1.4 billion. The influx of Indian users into the crypto space could potentially lead to increased investment opportunities.
In related developments, India's Income Tax Department (ITD) officials met with parliamentary lawmakers to discuss the challenges posed by cryptocurrencies and decentralized finance platforms in tax enforcement. The ITD highlighted that decentralized exchanges, anonymous wallets, and the cross-border nature of crypto transactions complicate taxation efforts. Jurisdictional differences in tax regulations further hinder efficient taxation of cryptocurrencies.
Under India's Income Tax Act, gains from cryptocurrency sales are taxed at a rate of 30%, with deductions limited to the cost basis against the gains. Crypto traders in India are unable to offset gains with losses from other transactions, as tax loss harvesting is not permitted. These discussions underscore the ongoing complexities in regulating and taxing the rapidly evolving crypto landscape in India.
Anais
