Exchanges lie at the core of the crypto economy, facilitating the buying, selling and trading of cryptocurrencies and other digital assets. They play a key role in adding liquidity to the whole ecosystem.
While Bitcoin was introduced in January 2009, exchanges like ZebPay and Unocoin emerged in India around 2013. As the number of crypto users grew in India, so did the number of local exchanges.
Per the National Association of Software and Service Companies report, the crypto market size in India in 2021 was $73.8 million, with predictions to touch $123.2 million in 2025 and $241.1 million by 2030. Global exchanges such as Binance and Kraken also catered to Indian crypto users, though the likes of Coinbase chose to opt out.
Crypto exchanges in India, however, faced a severe challenge amid regulatory uncertainty. This article provides readers with an overview of popular exchanges, the status of global exchanges in the country, the prevalent regulatory environment and the regulatory evolution in the crypto context.
Growth of crypto exchanges in India
The number of individuals who engage in crypto trading in India has been steadily growing, and the anticipated compound annual growth rate (CAGR) is an impressive 54.11%, spanning from 2024 to 2032. Projections suggest that the cryptocurrency market might hit $343.5 million in 2024, with an approximate annual growth rate of 7.99%, culminating in a projected total of $467.2 million by 2028.
Factors prompting the growth include the government’s open approach toward regulatory evolution regarding crypto, the expansion of the digital economy and the emergence of compliant local exchanges.
Popular crypto exchanges in India
Here is a brief overview of prominent crypto exchanges in India:
WazirX
WazirX offers an intuitive design that is helpful to both seasoned traders and beginners. Offering 300+ trading pairs of cryptocurrencies, the exchange caters to various trading preferences. It has robust security features in place, including two-factor authentication (2FA) and cold storage for funds.
The exchange offers swift Know Your Customer (KYC), application programming interface (API) trading and 24/7 support. Its quick buy features help users quickly buy and sell their favorite currencies, whereas advanced profit and loss (P&L) tracking assists in decision-making.
CoinDCX
CoinDCX offers a user-friendly platform for crypto trading along with a quick fiat on-ramp and off-ramp. Based in Mumbai, the exchange offers an “Earn” option, which allows users to earn interest on deposits. It offers 25x leverage on 220+ futures trading pairs and over-the-counter (OTC) trading.
The platform offers 6x leverage across 400+ markets on margin trading. CoinDCX also offers API trading to users, which means an API gives users access to real-time market data and allows them to trade through their account on the exchange.
CoinSwitch
CoinSwitch is a crypto exchange aggregator that offers a zero-fee model for a select range of trading activities, making it suitable for casual traders. The platform makes the trading process convenient, enabling users to compare prices across multiple exchanges and execute trades efficiently.
With support for over 300 cryptocurrencies, CoinSwitch provides room for portfolio diversification. Its competitive trading fees and quick transaction processing boost the user experience. It serves as a useful tool for both beginners and experienced crypto traders. API trading strategies on CoinSwitch PRO facilitate trading for experienced traders.
Unocoin
Unocoin rolls out useful features such as systematic investment plans (SIPs) and a mobile app for convenient trading on the go. It has integrated advanced security measures such as 2FA and cold storage for funds.
Unocoin’s crypto wealth club offers portfolio management, investment strategy, tax planning, performance tracking, research and market analysis, and other services. For a special category of its users, termed the Elite Club, the exchange offers an elevated level of service. The “Paper Wallet” feature provides an offline method for storing and managing digital assets.
Mudrex
Mudrex is known for expert-curated, theme-based crypto baskets that it terms “Coin Sets.” It offers users a secure way to get diversified exposure to crypto. It offers an array of useful tools that help traders make better decisions.
These tools include a fiat converter, a crypto converter, a crypto returns calculator, a crypto tax calculator and an innovative crypto fear and greed index that offers access to real-time market sentiment insights. Users who deposit crypto assets in its vault can earn interest and make passive income.
BitBNS
BitBNS enables users to do Tether (USDT) peer-to-peer trading, margin trading and futures trading. It offers fixed deposits, which allow users to deposit their crypto weekly, monthly, quarterly or bi-annually. The arbitrage plugin for Chrome, Firefox and Edge simplifies trading for users. The BNS trading API also allows you to access features of the exchange.
The exchange offers a pool as well, enabling users to stake BNS, a multi-protocol utility token, to get crypto at discounted rates. It has collaborated with third-party tax-filing solutions to help users file their crypto taxes.
ZebPay
Among the oldest exchanges in India, ZebPay offers several products for its users. It offers curated portfolios of crypto assets, thus giving users a data-driven experience. For experienced traders, it has rolled out perpetual futures that deal in both Bitcoin (BTC) and altcoins.
Users can get profit and loss insights into their portfolio and individual coin performance. They can lend their crypto for fixed returns. To keep crypto secure, the exchange uses cold wallets, strong internal controls and a proprietary multichain security system.
Global exchanges shut down in India
Nine international exchanges that operated in India were banned by the Financial Intelligence Unit (FIU), which accused them of noncompliance in January 2024. These included Binance, KuCoin, Bitstamp, Huobi, Kraken, MEXC Global, Bitfinex, Bittrex and Gate.io.
Thereafter, the apps of these exchanges were removed from the Apple Store and Google Play Store. Citing an adverse regulatory environment, OKX also ceased operations in India at the end of April 2024.
Regulatory status of local crypto exchanges in India
Regulatory ambiguity has been a pain point for the crypto community in India, including exchanges. The Reserve Bank of India (RBI) has been critical of crypto right from the outset. The Indian government, which had been taking a cautious approach toward crypto, made KYC mandatory for crypto exchanges and demanded that they register with the FIU.
Let us get into a bit of detail:
RBI’s adverse approach toward crypto
Though exchanges like ZebPay and Unocoin emerged around 2013, it was not until 2017 that the Indian government formed a committee to study cryptocurrencies and their impact. In December 2017, the RBI, which is the central bank of India, issued a warning about the risks associated with digital assets.
In April 2018, the RBI published a circular that forbade banks from working with cryptocurrency exchanges and merchants. This forced exchanges to look for alternatives and severely hindered their ability to facilitate fiat-to-crypto transactions.
In 2020, the Supreme Court of India overturned the banking prohibition imposed by the RBI, giving a much-needed reprieve to cryptocurrency exchanges and enabling them to offer on- and off-ramps again against the Indian rupee.
Mandatory KYC process and registration of exchanges with the FIU
The Indian government coined the term “virtual digital assets,” or VDAs, to define cryptocurrencies and similar tokens like nonfungible tokens (NFTs). Changes were made in the Information Technology Act of 2000 to make the KYC process mandatory when a new user joins a crypto exchange.
An exchange also needs to register itself with FIU India and keep records of financial transactions for five years. The exchanges were also brought under the Prevention of Money Laundering Act of 2002 (PMLA) as reporting entities. By December 2023, 28 crypto exchanges or virtual digital asset service providers had registered with the Financial Intelligence Unit in India.
Pankaj Chaudhary, minister of state for finance, clarified in the Lok Sabha on record that the guidelines and reporting requirements were also applicable to offshore crypto exchanges serving the Indian market. The minister warned that non-compliant offshore platforms would face action under the PMLA. The stern approach resulted in the banning of nine offshore exchanges, as mentioned earlier.
Elusive regulatory clarity in India
India is working on a multi-pronged regulatory approach toward crypto with a focus on global collaboration, as the government believes crypto cannot be effectively regulated until regulatory bodies in various countries work in tandem.
The government is looking to set up advanced KYC for crypto exchanges, which covers the Foreign Account Tax Compliance Act and existing Anti-Money Laundering (AML) standards. Crypto exchanges are likely to gain the same status as authorized dealers under the RBI’s guidelines. Mandatory positions such as Money Laundering Reporting Officer for crypto exchanges could be created under the new regulatory regime.
The future of crypto regulation in India
The adoption of blockchain technology is growing in India across a string of industries, particularly supply chain management, banking and gaming. In a few years, it is likely to create a scenario where the VDA-powered economy becomes closely integrated with the mainstream economy. Cryptocurrency exchanges will play a pivotal role in fostering such a digital transformation.
A well-balanced regulatory environment will weed out lousy exchanges and give compliant exchanges the boost they need to expand. It will promote the growth of a thriving and sustainable cryptocurrency ecosystem in India.
Written by Dilip Kumar Patairya