Indian Crypto Startups Brace For Compliance Storm Under New KYC Mandates |
India’s Financial Intelligence Unit (FIU) has updated protocols for cryptocurrency exchanges to improve anti-money laundering (AML) and KYC measures in an effort to curb illegal activities in the crypto sector.
The updated guidelines include mandatory live detection through selfies and geo-tracking during the onboarding process, along with additional compliance measures for crypto exchanges.
While the move was welcomed by many industry players as a sign of strengthening regulations to boost retail investor confidence, others said that the costs of complying with these guidelines will hinder the growth of crypto startups.
“Exchanges will face higher operational and compliance costs due to enhanced verification, monitoring systems, and reporting requirements. Integrating these rules will require investments in technology, compliance teams, and partnerships with KYC providers, but it also reduces regulatory risk in the long run,” said Sathvik Vishwanath, cofounder and CEO of crypto exchange Unocoin.
The higher costs, along with an already ambiguous regulatory environment, could force businesses to move abroad increasing the exodus of crypto startups from India, industry players told Inc42.
“Adding all these regulations and compliances without having any rules or clarity on how to run the business can cripple many new companies and startups. They face high compliance costs, including the need to hire new full-time employees even when there is no clarity on the regulation side,” added Aishwary Gupta, head of global payments at blockchain unicorn........