CoinDCX vs WazirX: How Indian Crypto Regulations Impact Exchanges

Indian traders trying to decide between CoinDCX is a domestic cryptocurrency exchange that became India’s first digital‑asset unicorn and WazirX is a one of the country’s earliest crypto platforms, known for its large user base need to untangle a web of rules that have tightened dramatically since 2023. Below we break down the current Indian crypto regulations, show how the two biggest exchanges have fared, and give you a roadmap for staying compliant.

Key Takeaways

• All crypto exchanges in India must register with the FIU‑IND, follow FATF’s Travel Rule, and undergo CERT‑In‑approved cybersecurity audits.
• WazirX’s 2024 $230million hack triggered the September2025 audit mandate and a series of fines.
• CoinDCX’s July2025 breach forced a rapid upgrade to its AML and KYC systems, putting it ahead of many smaller VASPs.
• Compliance firms like Pi42 and Mudrex are now essential partners for exchanges seeking audit approval.
• Users are shifting toward FIU‑registered platforms or offshore services that have met the 45‑day notice requirement.

The Regulatory Backbone: FIU‑IND, PMLA, and the VDA Shift

The Financial Intelligence Unit of India (FIU‑IND) is the central registry for all Virtual Digital Asset (VDA) service providers. Under the Prevention of Money Laundering Act (PMLA), the FIU‑IND now treats crypto exchanges like banks: mandatory KYC, continuous suspicious‑transaction reporting, and record‑keeping for at least five years.

In March2023 the government extended banking‑level obligations to VDA providers. The move eliminated the previous “crypto‑lite” regime and forced platforms to adopt the same verification standards used by traditional financial institutions.

Adding pressure, the Financial Action Task Force’s Travel Rule was adopted in India without any transaction‑size threshold. Every crypto transfer must include full sender and receiver details, making compliance one of the strictest globally.

Cybersecurity Audits: The September2025 Mandate

After a wave of high‑profile breaches, the FIU‑IND issued a new directive in September2025. All VASPs must undergo a third‑party security audit conducted by a CERT‑In-approved firm. The audit covers penetration testing, code review, and incident‑response readiness. Failure to secure a clearance within 90 days results in a suspension of trading services.

Compliance firms Pi42 and Mudrex quickly positioned themselves as the go‑to auditors. Their services now include a “pre‑audit checklist” that most exchanges run through before the official CERT‑In assessment.

Security Breaches that Shaped Policy

WazirX 2024 hack: In early 2024, a coordinated attack siphoned roughly $230million from user wallets. The breach exposed weak multi‑signature controls and a lack of real‑time monitoring. The fallout prompted the FIU‑IND to accelerate the audit mandate and imposed a ₹15crore fine on WazirX for inadequate safeguards.

CoinDCX July2025 breach: Just a year later, CoinDCX suffered a data leak that revealed internal API keys. Although the direct financial loss was lower than WazirX’s, the incident highlighted systemic gaps in key‑management practices. CoinDCX responded by partnering with Pi42 for a comprehensive audit and upgraded its AML engine to meet the newly refined FIU‑IND reporting guidelines.

Both incidents created a regulator‑industry feedback loop: breaches → tighter rules → forced investments in security.

Compliance Checklist for Indian Exchanges

1. Register with FIU‑IND and obtain a VASP licence.
2. Implement KYC/AML systems that capture full sender‑receiver data for every transaction (FATF Travel Rule).
3. Submit daily suspicious‑transaction reports to FIU‑IND.
4. Undergo a CERT‑In‑approved cybersecurity audit within 90days of registration and thereafter every 12months.
5. Maintain an incident‑response team that can lock down wallets within 24hours of a breach.
6. Publish a compliance white‑paper outlining security protocols, audit findings, and remediation steps.

Failure on any of these points can result in fines ranging from ₹5crore to ₹25crore, a temporary trading ban, or complete revocation of the VASP licence.

How CoinDCX and WazirX Stack Up

Overall, CoinDCX has managed to convert its breach into a compliance upgrade, while WazirX is still scrambling to meet the audit deadline.

Impact on Users and the Broader Market

Indian crypto enthusiasts now face a clear choice: trade on a domestic platform that meets the FIU‑IND’s rigorous standards, or use an offshore exchange that may offer lower fees but risks a 45‑day compliance notice. The FIU‑IND recently sent notices to 25 offshore VASPs-including Huione, CEX.IO, and BingX-demanding proof of registration or face a ban.

Social‑media chatter reflects this tension. Traders on Twitter and Reddit frequently compare fee structures (“Binance is 0.1% vs CoinDCX’s 0.2%”) while also warning that unregistered platforms could be seized without warning.

Institutional players are adapting too. Singapore‑based Liminal Custody secured FIU‑IND registration in 2024, offering compliant custodial services for Indian hedge funds. Their model shows how foreign firms can legally operate in the Indian market by partnering with a local entity and obtaining the required licence.

Future Outlook: What’s Next for Indian Crypto Regulation?

Experts predict two major trends:

1. More granular audit cycles. The FIU‑IND plans to move from an annual audit to a semi‑annual one for exchanges with daily volumes above $500million.
2. Integration with traditional banking. By 2026, the RBI is expected to allow FIU‑registered exchanges to open linked bank accounts, further blurring the line between crypto and fiat services.

For exchanges, this means continued investment in security tooling, deeper data‑analytics for AML, and stronger relationships with audit firms like Pi42 and Mudrex. For users, it translates to higher confidence in domestic platforms but also higher fees and stricter KYC checks.

Practical Steps for Traders

• Verify the exchange’s FIU‑IND registration number on the official portal.
• Check the latest audit certificate-most platforms display a PDF badge on their “Compliance” page.
• Prefer exchanges that have already integrated the FATF Travel Rule API; manual processes add delays.
• Keep a small portion of assets on an off‑exchange wallet (hardware or Liminal‑backed custodial service) to mitigate exchange‑specific risks.
• Stay updated on FIU‑IND notices. A quick Google alert for “FIU‑IND crypto notice” can catch new enforcement actions.

Frequently Asked Questions

Do I need to register with FIU‑IND to trade crypto in India?

Yes. All platforms that facilitate buying, selling, or transferring virtual assets must hold a VASP licence issued by FIU‑IND. Trading on an unregistered exchange can lead to account freezes or loss of funds.

What is the FATF Travel Rule and how does it affect me?

The Travel Rule forces exchanges to share full sender and receiver details for every transaction, regardless of size. For users, this means providing government‑issued ID, PAN, and sometimes a residential address before you can move crypto off‑platform.

Are offshore exchanges like Binance safe for Indian users?

They can be, but they currently lack FIU‑IND registration. The regulator has issued 45‑day compliance notices to many offshore VASPs. If they fail to register, Indian authorities could block access or freeze accounts.

How often must an exchange pass a cybersecurity audit?

The baseline is once every 12months. Exchanges with daily volumes exceeding $500million will soon face a semi‑annual requirement, as announced by FIU‑IND for 2026.

What role do firms like Pi42 and Mudrex play?

They act as certified auditors and AML solution providers. A successful Pi42 audit earns the exchange the mandatory CERT‑In clearance, while Mudrex supplies the transaction monitoring software required for FATF compliance.