CoinDCX and WazirX: How Indian Crypto Exchange Regulations Are Reshaping the Market

India’s crypto market didn’t collapse when regulations tightened-it adapted. And no two exchanges show that shift better than CoinDCX and WazirX. Once seen as pioneers of India’s crypto boom, both platforms now operate under a legal framework that treats cryptocurrency like a bank transaction. No more anonymity. No more shortcuts. Just strict rules, constant audits, and zero tolerance for mistakes.

What Changed in March 2023?

Before March 2023, Indian crypto exchanges operated in a gray zone. You could sign up with just an email. No ID checks. No transaction tracking. That changed overnight when the Financial Intelligence Unit of India (FIU-IND) slapped Virtual Digital Asset (VDA) providers with the same rules as banks under the Prevention of Money Laundering Act (PMLA). Suddenly, every user had to pass full KYC: government ID, address proof, face verification. Every trade had to be logged. Every transfer had to carry sender and receiver details-no exceptions.

This wasn’t just a policy tweak. It was a full system overhaul. India became one of the few countries to enforce the FATF Travel Rule with no minimum threshold. That means even a ₹100 transfer from CoinDCX to a friend’s wallet must include both parties’ full names, addresses, and wallet IDs. No other major market does this. Not the U.S. Not the EU. Not even Singapore.

The Breaches That Forced the Hand of Regulators

Regulations don’t exist in a vacuum. They’re often born from disaster. In 2024, WazirX got hacked. $230 million vanished. Not a few coins. Not a glitch. A full-scale breach that exposed how little security was built into the platform. Users lost life savings. Social media exploded. The government took notice.

Then, in July 2025, CoinDCX-India’s first crypto unicorn-suffered its own major breach. This wasn’t a coincidence. It was a pattern. Two of the biggest names in Indian crypto, both hit within 16 months. Regulators didn’t just get angry. They got systematic.

By September 2025, FIU-IND issued a new mandate: every crypto exchange in India must pass a cybersecurity audit by a CERT-In-approved firm. Not just any firm. Government-vetted. Independent. And it’s not a one-time check. It’s annual. And it’s expensive. For a small startup, that audit might cost ₹15 lakh. For CoinDCX or WazirX? It’s a line item in their budget.

Why International Exchanges Are Getting Notices Too

It’s not just Indian platforms under pressure. The government sent notices to 25 offshore exchanges-including BingX, Huione, and CEX.IO-giving them 45 days to register with FIU-IND or face a ban. These platforms don’t have offices in India. They don’t have local teams. But millions of Indians still trade on them because they offer lower fees and more coins.

Here’s the catch: if you’re serving Indian users, Indian law says you’re operating in India. That means you need to comply with KYC, AML, and now cybersecurity audits. Binance paid $2.2 million to register. KuCoin paid $41,000. Coinbase registered without a fine. But platforms like BingX? They’re still silent. If they don’t respond, they’ll be blocked. No warning. No grace period.

That’s causing chaos. Traders who relied on BingX for altcoins like Solana or Arbitrum are scrambling. Some switched to CoinDCX. Others turned to Liminal Custody, a Singapore-based firm now registered with FIU-IND, to hold their assets securely. A new market is forming: compliant custody services for Indian institutions.

The Real Cost of Compliance

Compliance isn’t free. It’s not just paperwork. It’s people. It’s software. It’s 24/7 monitoring systems. CoinDCX hired 40 new compliance officers. WazirX rebuilt its entire security stack. Smaller exchanges? Many shut down. Others merged. The cost of staying legal is so high that only the biggest can afford it.

That’s creating a two-tier market. On one side: CoinDCX, WazirX, and a handful of others with deep pockets and legal teams. On the other: users who still use unregistered offshore platforms because they’re cheaper and faster. But here’s the risk: if an offshore exchange gets shut down tomorrow, your funds could disappear with no recourse. No FDIC. No insurance. Just a message saying, “We’re offline.”

Meanwhile, companies like Pi42 and Mudrex are thriving-not by trading crypto, but by helping exchanges comply. They sell cybersecurity tools, KYC automation, and audit prep packages. Their business model? Profit from regulation.

What Users Are Saying

On Reddit and Twitter, Indian crypto traders are split. One side says: “Finally, some safety. I lost money in the WazirX hack. I don’t want that to happen again.” The other side says: “I can’t trade Shiba Inu on CoinDCX. Why should I pay more for less choice?”

Some are hedging. They keep 30% of their portfolio on CoinDCX for security. The rest on BingX for access. It’s a risky game. But it’s the only way to balance safety and opportunity right now.

The Bigger Picture: India’s Strategy

India isn’t trying to kill crypto. Finance Minister Nirmala Sitharaman said that in 2022. What India wants is control. It wants to know who’s trading what, when, and why. It wants to stop money laundering, ransomware payments, and terrorist financing-all real problems in the crypto space.

That’s why the rules are so strict. No loopholes. No exceptions. If you want to operate here, you play by Indian rules. It’s not about stifling innovation. It’s about protecting people. And for now, that means making compliance the cost of doing business.

What’s Next?

The next 90 days will decide the future of India’s crypto market. If offshore exchanges register, we’ll see a more diverse, regulated ecosystem. If they don’t, we’ll see a sharp drop in trading volume and a sudden surge in demand for compliant local platforms.

One thing’s clear: the era of crypto in India as a wild west is over. The banks are here. The auditors are here. The regulators are watching. The question isn’t whether you can trade crypto in India anymore. It’s whether you’re trading it the right way.