India’s crypto firms face stricter KYC under PMLA, but lack CKYC access; Enabling it can boost compliance, transparency, and trust in the VDA ecosystem
Estimated reading time: 3 minutes
With India’s crypto ecosystem growing rapidly, the importance of strong compliance systems has never been greater. One key piece of this puzzle is access to the Central KYC (CKYC) Registry. Amendments under the Prevention of Money Laundering Act, 2002 (PMLA) have brought Virtual Digital Asset (VDA) service providers within the category of “reporting entities.” This means they must now follow stringent KYC procedures, maintain detailed records, and report suspicious transactions to the Financial Intelligence Unit–India (FIU-IND).
To keep pace with evolving developments and address system inconsistencies, FIU-IND has updated the guidelines with more stringent onboarding processes. Against this backdrop, access to CKYC becomes essential.
Table of contents
What is Central KYC (CKYC)?
Central KYC serves as a single, standardised database containing verified KYC information for individuals and entities across India’s financial system.
Role of CERSAI and Regulatory Framework
The Central Registry of Securitisation, Asset Reconstruction and Security Interest of India operates the CKYC platform to simplify onboarding and avoid repetitive KYC submissions.
Moreover, it improves AML compliance across India’s financial system. According to official CKYC FAQs, authorities provide access only to institutions authorised under PMLA or regulated by RBI, SEBI, IRDAI, or PFRDA.
However, despite FIU-IND registration as the AML supervisory body, Virtual Asset Service Providers still lack access to the CKYC database.
Furthermore, this situation appears puzzling, especially since CERSAI and other financial entities operate under the Ministry of Finance. Excluding VASPs restricts their ability to meet PMLA obligations fully and raises concerns about regulatory coherence across the financial system.
Why CKYC Access for VASPs Matters
Granting them CKYC access would not only make compliance smoother but would also strengthen India’s overall AML ecosystem.
The roadblock stems from the fact that CKYC access is normally reserved for entities regulated by traditional financial authorities such as the RBI or SEBI. Since VDA platforms do not fall under these supervisory frameworks, they remain outside the current eligibility criteria. However, given that they are now formally subject to AML requirements, this is ultimately a technical issue — one that policymakers can address with a clear notification or amendment.
This conversation becomes even more relevant when seen in the context of wider KYC challenges across sectors. A year ago, the Financial Stability and Development Council (FSDC) discussed the need for uniform KYC standards. A committee led by then Finance Secretary T. V. Somanathan was formed to streamline and harmonise these norms. Including the VDA sector in such committees would help ensure that no key stakeholders are left out of efforts to build a robust KYC framework.
For the VDA industry, complying with PMLA goes beyond meeting regulations and helps build user confidence and sector credibility. Moreover, strong KYC processes and timely reporting reduce financial crime risks, protect consumers from fraud, and support healthy digital asset growth in India. Additionally, allowing VASPs to use the CKYC system would enhance regulatory compliance and consumer protection. Furthermore, this step would reinforce trust in India’s digital asset ecosystem.
Also Read Below:
