CoinDCX vs WazirX: How Indian Crypto Exchange Regulations Impact You

Quick Takeaways

• Both CoinDCX and WazirX must register with the FIU‑IND and follow the PMLA‑based KYC/AML regime introduced in March2023.
• The September2025 FIU mandate now forces every VASP to undergo a CERT‑In‑approved cybersecurity audit.
• WazirX suffered a $230million breach in 2024; CoinDCX faced a major breach in July2025. Both incidents triggered higher fines and stricter oversight.
• India enforces the FATF Travel Rule with zero‑threshold reporting, meaning every crypto transfer must include full sender‑receiver details.
• Compliance costs are pushing smaller Indian exchanges out of the market, while large players like CoinDCX can absorb the expense and even partner with local cybersecurity firms.

Regulatory Foundations in India

India’s crypto framework rests on two pillars: the Financial Intelligence Unit of India (FIU‑IND) and the Prevention of Money Laundering Act (PMLA). In March2023, the government classified Virtual Digital Asset (VDA) service providers as “banking‑level” entities, compelling them to adopt rigorous KYC, AML, and reporting standards similar to traditional financial institutions.

Since then, the regulatory regime has layered additional obligations:

1. Continuous registration with FIU‑IND.
2. Real‑time reporting of suspicious transactions.
3. Implementation of the FATF Travel Rule with no minimum transaction threshold.
4. Mandatory cybersecurity audits by CERT‑In‑approved firms (effective September2025).

Why the Travel Rule Matters

The Financial Action Task Force (FATF) Travel Rule requires VASPs to transmit the full sender‑receiver data for every crypto movement. India has adopted a zero‑threshold version, meaning even a $10 transfer must carry name, address, and wallet identifiers. Failure to comply can trigger FIU fines ranging from ₹5lakh to ₹2crore per breach, plus possible suspension of the exchange’s licence.

For traders, this translates to a higher compliance burden: KYC documents must be verified for every user, and the platform must retain detailed logs for at least five years. The rule also forces exchanges to integrate with global travel‑rule compliance solutions like TravelRule‑compliant APIs, adding to operational costs.

Cybersecurity Audits: The September2025 Shift

After the 2024 WazirX hack and the July2025 CoinDCX breach, FIU‑IND announced a new requirement: all VASPs must undergo a comprehensive security audit conducted by a CERT‑In‑approved firm every 12months. The audit covers:

• Penetration testing of hot‑wallet infrastructure.
• Code review of smart‑contract bridges.
• Incident‑response plan validation.
• Third‑party vendor risk assessment.

Non‑compliance results in a mandatory suspension until remedial actions are verified, plus a fine of up to ₹10crore. Smaller exchanges, lacking in‑house security teams, often outsource to firms such as Pi42 or Mudrex, which have built niche compliance products for Indian crypto firms.

CoinDCX vs WazirX: A Side‑by‑Side Compliance Snapshot

Impact on Everyday Traders

If you trade on either platform, the regulatory churn changes three main things:

1. Verification friction: Expect additional document uploads and periodic re‑verification, especially after the audit cycles.
2. Fee structure shifts: Compliance costs are often passed on as higher withdrawal or transaction fees. CoinDCX, for instance, raised its withdrawal fee from 0.2% to 0.3% in August2025.
3. Asset availability: Some smaller tokens may be delisted until a full compliance review is completed.

Many traders now diversify across both domestic compliant exchanges and offshore platforms that still offer lower fees but operate under a cloud of regulatory uncertainty.

Offshore Exchanges and the 45‑Day Notice

FIU‑IND issued a 45‑day compliance notice to 25 offshore VASPs, including Huione, CEX.IO, and BingX. The notice demands proof of Indian registration, AML policy alignment, and a recent cybersecurity audit. Failure to comply could lead to a blanket ban for Indian users.

International players like Coinbase and Binance have already registered, albeit with penalties (Binance paid a $2.2million fine). Their compliance pathways highlight two strategies for offshore firms:

• Partner with a local Indian entity to share KYC and audit responsibilities.
• Establish a dedicated Indian subsidiary that meets FIU‑IND registration criteria.

Until the deadline passes, Indian traders on these platforms may face sudden service interruptions, prompting a wave of migration toward compliant domestic exchanges.

Future Outlook: Balancing Innovation and Oversight

India’s approach mirrors global trends-tightening AML/CTF rules while pushing cybersecurity to the core of financial services. Analysts predict three possible scenarios over the next 12months:

1. Consolidation: Smaller exchanges either merge with larger players or exit the market, leading to a more concentrated ecosystem dominated by CoinDCX, WazirX, and a few international entrants.
2. Tech‑driven compliance solutions: Companies like Pi42, Mudrex, and Liminal Custody will see rapid growth as VASPs outsource audit, reporting, and custody functions.
3. Regulatory refinement: The government may introduce “tiered” compliance thresholds based on transaction volume, easing pressure on low‑volume platforms while keeping high‑volume actors under strict scrutiny.

For traders, the safest bet remains to use platforms that have already cleared the September2025 audit and demonstrate ongoing FATF Travel Rule compliance. Keeping an eye on FIU‑IND circulars and audit reports will help you avoid unpleasant surprises.

Key Steps to Stay Compliant as a User

1. Verify that your exchange displays a current FIU‑IND registration number.
2. Check the latest audit certificate-most platforms post a PDF on their “Compliance” page.
3. Complete full KYC, including address proof and source‑of‑funds declaration.
4. Maintain separate wallets for large holdings; use hardware wallets for amounts over $10k.
5. Stay updated on FIU‑IND notices via official Twitter or the government gazette.

Following these steps reduces the risk of account freezes, sudden fund losses, or legal complications.