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Choosing an Exchange Without Getting Burnt
How do I pick a safe crypto exchange in India?
Ask the exchange for its FIU-IND registration number, then compare custody, cost, and withdrawals; registration alone does not prove your money is safe. Check INR deposit speed, automatic TDS handling, a tax report, proof of reserves, and all-in cost.
Module 1 · Chapter 9 of 10 · ~5 min read · Tax and law facts as of August 2026
You already keep records for Schedule VDA at tax time. Those records start at one place: your exchange, so check it before you send a single rupee.
- 1%TDS when you sell
- ₹50,000TDS-free limit for most
- $230Mstolen in the WazirX hack
- 6checks before you sign up
Check the registration yourself
Indian crypto exchanges are reporting entities under the PMLA, India's anti-money-laundering law. As of August 2026, they must register with FIU-IND, the Financial Intelligence Unit.
Registration means the exchange checks your identity and reports suspicious transactions. That is not proof your money is safe.
It proves only that the exchange follows AML rules. Treat "FIU-IND registered" as an entry ticket, not a safety certificate.
FIU-IND does not publish a searchable registry, as of August 2026, so don't trust any app's banner claim.
Your coins sit in their wallet, not yours
Buy Bitcoin on an app, and the coin does not move to a wallet you control. It sits in the exchange's pooled wallet, mixed with thousands of other users' coins.
Say you buy ₹5,000 of Bitcoin at an August 2026 price near ₹60 lakh a coin. Your app then shows about 0.0008 BTC.
Your app balance is an IOU: a promise the exchange owes you that coin. You truly own crypto only once you move it to your own wallet.
That means a wallet where only you hold the private key, the code that controls your coin.
The WazirX lesson: concentration, not contagion
In July 2024, hackers breached WazirX's multisig wallet and stole roughly $230 million worth of crypto. Withdrawals froze for months while WazirX worked out a recovery plan.
A smaller idle balance on any exchange shrinks what a breach can take. That holds for WazirX, CoinDCX, or any other platform.
Six things to compare before you sign up
Marketing claims and app-store ratings will not tell you what matters. Compare exchanges on these six concrete things instead.
- INR rails: how fast UPI or IMPS deposits and withdrawals clear.
- Automatic TDS handling: whether the exchange deducts and deposits your 1% TDS, as of August 2026.
- Downloadable tax report: a ready file for filing season, not a manual export.
- Published proof of reserves: a public, auditable statement it holds the coins it owes.
- All-in cost on a ₹1,000 buy: spread plus fee plus TDS, not just the headline fee.
- Public record on stuck withdrawals: search news and forums before you deposit.
Say you put ₹1,000 into a Bitcoin buy on three exchanges.
| Exchange | Spread | Trading fee | You receive (before TDS) |
|---|---|---|---|
| Exchange A | 0.5% | 0.2% | ₹993 |
| Exchange B | 1.0% | 0.4% | ₹986 |
| Exchange C | 0.3% | 0.1% | ₹996 |
The spread is the gap between the buy price and the real market price. It is often bigger than the fee an app advertises upfront.
Score any exchange on these six criteria yourself, rather than trusting a star rating.
Spot and derivatives are separate decisions
Buying a coin and holding it is a spot trade. Betting on its price through a contract is a derivative trade.
A perpetual future is a contract with no expiry date that tracks a coin's price. In India these trade on a platform with a derivatives arm, such as Delta Exchange India.
Start with one registered exchange, and move slowly. Put in a small first amount you're prepared to lose.
Confirm deposits and withdrawals both work before you add more. A large idle balance stays exposed to whichever exchange holds it.
Crypto itself is not legal tender in India, as of August 2026. Indian tax law treats it as an asset, not as money.
No shop or landlord has to accept it as payment. The next chapter covers a different risk: P2P trades and frozen bank accounts.
Key takeaways
- Ask for the FIU-IND registration number in writing, then read its compliance-orders page yourself.
- Registration proves AML compliance only, not solvency or the safety of your money.
- Coins on an exchange sit in its own wallet; your app balance is only an IOU.
- The July 2024 WazirX breach stole ~$230 million and froze withdrawals for months; the lesson is concentration risk.
- Compare six things: INR rails, TDS handling, tax report, proof of reserves, all-in cost, withdrawal record.
- The 1% TDS under Section 194S starts above ₹50,000 a year for most individuals, ₹10,000 for others.
- Perpetual futures in India need a platform with a derivatives arm, such as Delta Exchange India.
- Start with one registered exchange, a small amount, and no large idle balance.
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Educational & illustrative only — not investment advice. Drishti Pro publishes AI-generated trade ideas and their public track record for information. Crypto is volatile and you can lose money. Nothing here is a recommendation to buy or sell any asset. Do your own research.