CoinDCX and WazirX: Indian Crypto Exchange Regulations in 2026

How a $230 Million Hack Changed Everything

In September 2024, WazirX lost $230 million in a single hack. This wasn't just a bad day for the exchange-it triggered a complete overhaul of India's crypto regulatory framework. Before this incident, crypto exchanges operated in a gray area. Afterward, regulators moved quickly to enforce banking-level security standards. Today, every Indian crypto platform must follow strict rules to protect users and prevent money laundering. This article explains exactly what those Indian crypto regulations mean for CoinDCX, WazirX, and everyday traders.

How Regulations Changed After the 2024 WazirX Hack

In March 2023, India brought Virtual Digital Asset (VDA) service providers under the Prevention of Money Laundering Act (PMLA) is India's primary law targeting money laundering and terrorist financing. This meant exchanges had to implement Know Your Customer (KYC) is the process of verifying user identities to prevent fraud and money laundering and Anti-Money Laundering (AML) refers to systems and procedures designed to stop illicit financial flows checks at banking levels. But the WazirX breach exposed how weak these rules were in practice. The Financial Intelligence Unit of India (FIU-IND) is the government body responsible for monitoring financial transactions under the Prevention of Money Laundering Act (PMLA) stepped in hard.

Then in September 2025, the CERT-In is India's national cybersecurity agency responsible for handling cyber threats mandated mandatory cybersecurity audits are mandatory third-party security checks approved by CERT-In for all crypto exchanges. These audits had to be done by government-approved firms. For smaller exchanges, this became a huge cost. Larger ones like CoinDCX had the resources to adapt, but many startups struggled to stay afloat.

What Happened to CoinDCX and WazirX?

WazirX was one of India's pioneering crypto exchanges that suffered a $230 million hack in 2024 was a wake-up call. The hack happened because of a single vulnerability in their system. Users lost funds, and the exchange took months to recover. Meanwhile, CoinDCX is India's first digital asset unicorn that experienced a major breach in July 2025 also faced a significant security incident. Both exchanges now face regular fines and strict monitoring from regulators.

Before these breaches, many Indian users thought domestic exchanges were safer than offshore ones. Now, the reality is more complicated. While CoinDCX and WazirX comply with regulations, their security issues show that compliance alone isn't enough. Traders need to understand the risks and how exchanges handle them.

Why the FATF Travel Rule Matters for Indian Traders

India implemented the FATF Travel Rule requires crypto exchanges to share sender and receiver details for all transactions with no minimum threshold. This means every single crypto transfer-whether $1 or $1 million-requires full sender and receiver information. The goal is to track money flows and prevent money laundering. But this rule has real consequences for users.

For example, when you send Bitcoin from CoinDCX to another exchange, both platforms must share your personal details and transaction history. This makes it harder for bad actors to hide funds, but it also means less privacy for regular traders. Some users have switched to offshore exchanges that don't enforce this rule strictly, but those platforms now face bans from Indian regulators. As of February 2026, 25 offshore exchanges including Binance registered in India after paying a $2.2 million penalty for previous non-compliance, KuCoin registered in India after a $41,000 fine for regulatory violations, Huione is among the 25 offshore exchanges facing Indian regulatory notices, CEX.IO received an official notice from Indian authorities for potential money laundering risks, and BingX resumed operations within 24 hours after a breach, unlike WazirX's slower recovery are under review. If they don't comply within 45 days, they'll be banned in India.

Offshore Exchanges vs. Domestic Platforms: What's Safer?

Many traders wonder why they should use Indian exchanges when offshore platforms like Binance offer lower fees and more coin options. The answer is simple: risk. Offshore exchanges that don't comply with Indian regulations can shut down overnight. When the Indian government issued notices to 25 offshore platforms in late 2025, users of those services faced sudden account freezes and lost access to their funds. In contrast, CoinDCX and WazirX operate legally, so your assets are protected under Indian law. But they're not perfect-both have had major security issues.

Some users try to split their holdings between compliant domestic exchanges and offshore platforms. This is risky because Indian regulators can still track cross-border transactions. Experts advise keeping most assets on one compliant domestic exchange and only using offshore platforms for small amounts you can afford to lose. As Liminal Custody is a Singapore-based service registered with FIU-IND for secure digital asset custody (a FIU-registered entity providing compliant digital asset custody services for Indian institutions) demonstrates, international firms can operate legally in India if they follow the rules.

How Exchanges Are Adapting to New Rules

CoinDCX and WazirX now spend millions on cybersecurity. They've partnered with firms like Pi42 is a cybersecurity firm helping exchanges meet India's audit requirements and Mudrex provides compliance solutions for Indian crypto platforms under new regulations to pass the mandatory audits. These partnerships have improved security but also raised costs. As a result, transaction fees on Indian exchanges have increased slightly, and some smaller coins are delisted to reduce risk.

Smaller exchanges that can't afford these upgrades are shutting down. Only the biggest players like CoinDCX can handle the compliance burden. This means less competition and fewer choices for traders. But it also means more trust in the market. Regulators say this is necessary to protect investors. Finance Minister Nirmala Sitharaman has repeatedly warned that "compliance isn't optional-it's the price of operating in India's crypto space."

What Traders Should Do Now

If you're trading crypto in India, here's what you need to do:

• Only use exchanges registered with FIU-IND. Check their compliance status on the official FIU-IND website.
• Enable two-factor authentication (2FA) and never share your recovery phrases.
• Keep large amounts in cold storage, not on exchanges.
• Monitor news about regulatory updates-new rules can change overnight.
• Understand that offshore exchanges carry high risk; only use them for small, non-essential trades.

As one trader put it: "I used to think offshore was better for fees. Now I know compliance means safety. I keep 90% of my assets on CoinDCX and only trade small amounts elsewhere."

The Future of Crypto in India

India's regulatory approach is becoming a model for other emerging markets. By prioritizing security over convenience, the government aims to build a trustworthy crypto ecosystem. However, this could stifle innovation if compliance costs drive away startups. The current 45-day compliance window for offshore exchanges will soon determine how many international platforms remain in India.

Experts predict market consolidation-only a few large exchanges will survive. Smaller players might merge or exit. Meanwhile, cybersecurity firms like Pi42 and Mudrex are thriving as compliance becomes a core business. The key takeaway? India isn't banning crypto-it's forcing it to mature. For traders, this means more security but less flexibility. For the industry, it's a chance to build real value beyond speculation.