India’s crypto ecosystem is growing rapidly. In this environment, strong regulatory compliance has become more important than ever. One significant development in this direction is providing Central KYC (CKYC) access to Virtual Digital Assets (VDA) service providers.
PMLA Regulations and FIU-IND Guidelines
Under the Prevention of Money Laundering Act (PMLA), 2002, Virtual Digital Asset service providers have been classified as “Reporting Entities”. This means they must follow strict KYC procedures, maintain detailed records, and report suspicious transactions to FIU-IND.
In early 2026, FIU-IND updated its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) guidelines, making live selfie verification, geo-location, and PAN authentication mandatory.
What is Central KYC (CKYC) and Why is it Important?
Central KYC is a unified, standardized database managed by CERSAI (Central Registry of Securitisation, Asset Reconstruction and Security Interest of India). It contains verified KYC information of individuals and entities across India’s financial system.
Key Objectives of CKYC:
- Simplify customer onboarding
- Eliminate repeated KYC submissions
- Strengthen Anti-Money Laundering compliance
Why VDA Providers Still Don’t Have CKYC Access?
Despite being registered with FIU-IND, Virtual Digital Asset service providers (crypto exchanges and platforms) have not yet been granted access to the CKYC database. This is surprising because CERSAI operates under the Ministry of Finance.
Traditional financial institutions regulated by RBI, SEBI, IRDAI, and PFRDA enjoy CKYC access, but crypto platforms remain excluded. This creates operational challenges and raises questions about regulatory consistency across the financial sector.
Benefits of Granting CKYC Access to Crypto Platforms
Allowing VDA providers access to CKYC would deliver multiple advantages:
- Easier and faster customer onboarding
- Reduced compliance costs
- Stronger AML monitoring and fraud prevention
- Increased investor trust and confidence
- Overall growth of a mature digital asset ecosystem in India
This is largely a technical and policy gap that can be resolved through a simple notification or amendment by the government.
FSDC Committee and Need for Uniform KYC Standards
Last year, the Financial Stability and Development Council (FSDC) discussed the need for uniform KYC norms across sectors. A committee headed by former Finance Secretary T.V. Somanathan was formed to simplify and standardize KYC rules. Including the Virtual Digital Asset sector in such initiatives is essential for building a robust, inclusive KYC framework.
Conclusion: A Step Towards Trust and Compliance
For the Virtual Digital Asset industry, PMLA compliance is not just about following rules — it is about building long-term credibility and user trust. Granting Central KYC access to Virtual Digital Assets is a practical and forward-looking move.
It will strengthen regulatory compliance, enhance consumer protection, and support the orderly growth of India’s digital asset ecosystem.
manojsharma76us@yahoo.com