The Reserve Bank of India (RBI) has issued a fresh set of guidelines for crypto exchanges operating in the country, mandating Tax Deducted at Source (TDS) compliance and stringent Know-Your-Customer (KYC) norms. The move is aimed at bringing greater transparency and accountability to the burgeoning crypto market.

As of April 15, 2026, all registered crypto exchanges must deduct a 1% TDS on every transaction exceeding ₹10 lakhs ($13,000 USD). This means that exchanges will have to withhold a portion of each user's earnings and deposit it into their government-allocated accounts. The funds collected through TDS will be used for taxation purposes.

The RBI has also made KYC compliance more stringent. Exchanges must now verify the identity of users through document-based authentication, which includes uploading identification documents such as Aadhaar cards, passports, or driving licenses. Additionally, exchanges must conduct regular audits to ensure user data is stored securely and in accordance with Data Protection Regulations.

The guidelines also emphasize the need for crypto exchanges to maintain a robust anti-money laundering (AML) framework, preventing any potential misuse of the platform for illicit activities. Exchanges have been given six months (until October 15, 2026) to comply with these new regulations.

Industry experts foresee a mixed impact on crypto investors. On one hand, TDS compliance will ensure that the government collects its due taxes from crypto earnings, reducing tax evasion. However, it may also lead to a decrease in investor participation as they might be deterred by the additional costs incurred through TDS deductions.

Exchanges too will have to adapt quickly to these new guidelines. "To comply with RBI's regulations, exchanges must invest heavily in technology and infrastructure," said an industry insider. "This might lead to increased operational costs, which could negatively impact profit margins."

The RBI's move is a step towards formalizing the crypto market in India, making it more accessible to mainstream investors while ensuring that regulatory requirements are met.