India's Strengthened Cryptocurrency Regulation Forcing New Industry Responses

In early 2026, India’s Financial Intelligence Unit (FIU) announced new regulatory requirements for cryptocurrency exchanges, strengthening measures against money laundering and terrorist financing. This move has brought significant changes to India’s cryptocurrency market, posing new challenges for both exchange operators and users.

Major tightening of KYC procedures for Indian cryptocurrency exchanges

Under the new regulations, cryptocurrency exchanges in India are now required to perform more rigorous identity verification for users than before. Specifically, users must prove their liveliness and authenticity through a live selfie blinking to confirm they are real, while also providing accurate records of geographic coordinates, date, time, and IP address.

In addition to the traditional Permanent Account Number (PAN), submission of multiple additional documents such as passports, driver’s licenses, Aadhaar cards (issued by the central government), and voter IDs is now mandatory. Furthermore, mobile phone numbers and email addresses are verified via One-Time Passwords (OTPs). Ownership verification of bank accounts is conducted through a “Penny Drop” method, involving a small refundable charge of 1 rupee (INR) for authentication.

Enhanced monitoring of high-risk customers and introduction of ICO regulations

Monitoring of cryptocurrency users within India has become even stricter. Customers associated with tax havens or FATF-related jurisdictions, as well as potentially risky individuals and non-profit organizations, are now subject to enhanced due diligence checks every six months.

More significantly, initial coin offerings (ICOs) and initial token offerings (ITOs) will no longer be supported on Indian cryptocurrency platforms. FIU guidelines explicitly state that ICOs and ITOs “lack legitimate economic grounds and pose high and complex risks for money laundering and terrorist financing.”

Additionally, tools that make tracking cryptocurrencies difficult, such as mixers and tumblers, are now prohibited. All platforms must register with the FIU, report suspicious transactions, and retain user data for five years.

Legal status and regulatory framework of cryptocurrencies in India

The Indian government classifies cryptocurrencies as Virtual Digital Assets (VDAs) under the 1961 Income Tax Act. This classification allows Indian citizens to buy and sell VDAs through FIU-registered platforms but prohibits using cryptocurrencies as a means of payment for goods and services instead of legal tender.

Bitcoin recovers above $70,000, altcoins also perform well

Meanwhile, the global cryptocurrency market has received positive news. Bitcoin (BTC) has surpassed $70,000 and has maintained most of its gains. Currently, Bitcoin is priced at $70.94K (as of March 23, 2026), with a 24-hour increase of +4.46%.

This rally is believed to be driven by U.S. President Donald Trump announcing a five-day pause on attacks against Iran’s energy infrastructure. The easing of geopolitical tensions has improved market sentiment.

Ethereum (ETH) rose +5.55% in 24 hours, Solana (SOL) +6.89%, and Dogecoin (DOGE) +5.63%, indicating a strong performance across the altcoin market. Cryptocurrency mining stocks also rose broadly in tandem with the stock markets, with the S&P 500 and Nasdaq each gaining about 1.2%.

Crude oil prices and Strait of Hormuz stability become Bitcoin’s next focus

Market analysts point out that Bitcoin’s future movements will depend on crude oil prices and the stability of maritime traffic through the Strait of Hormuz. If geopolitical risks decrease, prices could test the $74,000 to $76,000 range again, but worsening Middle Eastern tensions could push prices down toward $60,000.

India’s new cryptocurrency regulatory framework will mean increased operational and compliance costs for market participants but is also expected to enhance market transparency and trust.