Are you planning to start a crypto exchange in India? 

Then this is something you need to know before taking your next step.

In March 2024, the Financial Intelligence Unit of India (FIU) issued notices to several well-known crypto platforms for operating without proper registration (source). This move is a strong reminder that compliance is now a serious requirement in India’s crypto space. If your exchange is not registered with FIU, you could face legal issues, lose access to payment services, or struggle to build trust.

A recent report by The Economic Times also highlighted that crypto companies failing to register with FIU could face financial penalties or even be restricted from operating within Indian territory.

Here is why FIU registration is now a must:

• FIU India monitors financial activity to prevent money laundering and fraud
• Exchanges without registration risk being blocked by banks and payment service providers
• In March 2024, more than nine major platforms were warned for non-compliance
• Registration helps build trust, ensures smooth operations, and keeps your exchange legally safe

In this blog, we will walk you through what FIU registration involves, why it is essential for your crypto exchange, and how to navigate the process confidently.

What Is FIU (Financial Intelligence Unit – India)?

FIU stands for Financial Intelligence Unit – India. It is a government agency that watches over financial activities to stop illegal money movements like money laundering and fraud.

It collects and checks information from banks, payment companies, crypto exchanges, and other financial businesses to make sure everything is safe and legal.

If you are starting a crypto exchange in India, you must register your company with FIU. This shows that your business follows the rules and is not involved in any illegal activity.

Why FIU Registration Is Key to Launching a Crypto Exchange in India

Planning to start a crypto exchange in India? Then you must know that there is no special crypto license yet. But that does not mean you can run your platform freely. You still need to follow legal steps to avoid trouble later.

After registering your company under Indian law, the most important step is getting registered with the Financial Intelligence Unit of India (FIU).

Here is why FIU registration is very important:

• It is a legal requirement under the Prevention of Money Laundering Act (PMLA). If your platform handles crypto, you must follow anti-money laundering rules.
   
• It allows you to work with banks and payment providers, who prefer to deal only with compliant exchanges.
   
• It helps you stay transparent by keeping track of crypto transactions, reporting income, and avoiding tax issues.
   
• Without FIU registration, your exchange may be considered illegal or risky, which can lead to blocking or fines from Indian authorities.

The government already took action in 2024 by warning and blocking exchanges that were not FIU-registered. So it is not just a suggestion, it is a must.

In short, FIU registration helps you stay legal, gain trust, and build a strong foundation for your crypto exchange business in India.

Who Must Register with FIU-IND to Start a Crypto Exchange?

Any individual or entity that acts as a Virtual Asset Service Provider (VASP) in India is required to register with the Financial Intelligence Unit India (FIU IND). This requirement is a result of a 2023 notification by the Ministry of Finance, which brought virtual digital assets (VDAs) under the scope of the Prevention of Money Laundering Act (PMLA) of 2002.

A VASP is defined as a business that performs any of the following activities for another person:

• Exchanging virtual digital assets for fiat currency.
• Exchanging one form of virtual digital asset for another.
• Transferring virtual digital assets.
• Safekeeping or administering virtual digital assets or instruments that allow control over them.
• Providing financial services related to an issuer's offer or sale of a virtual digital asset.

This definition goes beyond just crypto exchanges. It includes any business that offers services like cryptocurrency wallet providers, NFT platforms, and other digital asset trading platforms. Even offshore VASPs that serve the Indian market are required to register and comply with the regulations.

The main purpose of this registration is to combat money laundering and terrorist financing. By registering, these entities become "reporting entities" and are obligated to adhere to specific compliance standards. These include conducting customer due diligence, maintaining transaction records for five years, and reporting any suspicious activities to FIU IND.

FIU Registration Process Guide for Crypto Exchanges In India: Documents, Steps, and Timelines

Steps for Registration

The registration process with the Financial Intelligence Unit India begins with recognising the exchange as a reporting entity under the Prevention of Money Laundering Act.

1. The applicant exchange submits an application for reporting entity registration to FIU India along with the required information and supporting papers.
    
2. FIU India verifies the details and issues a certificate of registration once all compliance requirements are met.
    
3. After this stage, the exchange must appoint a principal officer who will act as the main compliance contact for FIU India.
    
4. A separate application is filed for the principal officer, including their credentials and authority to act on behalf of the exchange.
    
5. FIU India reviews the application and issues a registration certificate for the principal officer, completing the registration process.

Documentation Required

For Individuals

• Recent passport size photograph
• Government approved identification proof such as passport, driving licence or voter ID
• Address proof showing both identity and residence details
• Additional business and financial information if requested

For Companies

• Certificate of Incorporation, Memorandum of Association and Articles of Association
• Valid identification proof for managers or authorised signatories
• Board resolution granting transaction authority
• Power of attorney for authorised representatives

For Partnerships and Trusts

• Partnership deed or trust deed
• Registration certificate
• Identification proof for authorised signatories
• Governing body or board resolution allowing transactions

Timeline for Registration

The time required for FIU registration depends on how accurately the documents are prepared and submitted. On average, initial verification of the reporting entity can take between three to four weeks. Approval of the principal officer generally follows within another two to four weeks. In most cases, a complete and well-documented application can result in full registration within one to two months.

Compliance Checklist for FIU IND Registered Crypto Exchanges

The compliance checklist above outlines are the core areas and requirements every FIU IND-registered crypto exchange must follow to remain fully compliant. From legal frameworks to data security, each step is essential for building trust and avoiding penalties. For a deeper understanding of how these rules apply in practice, explore our complete guide on crypto exchange regulations and compliance.

Common Pitfalls That Can Lead to FIU-IND Registration Rejection

• Submitting incomplete or incorrect documentation
• Mismatch in details between application and supporting papers
• Lack of clarity about business model and operations
• Not appointing a qualified principal officer
• Weak Know Your Customer and compliance procedures
• Delayed or unprofessional responses to FIU India queries

Now that you have seen the common pitfalls in FIU IND registration, explore the 10 most critical mistakes to avoid when building your crypto exchange

Build an FIU-Compliant Crypto Exchange: What You Need

Creating a crypto exchange that meets FIU IND standards requires a strong legal foundation and strong compliance systems. Begin by registering your business as a reporting entity and appointing a qualified principal officer. Implement thorough Know Your Customer verification, maintain detailed transaction records, and establish real time monitoring for suspicious activity. 

Ensure secure data management and periodic compliance audits to meet regulatory expectations. A dedicated compliance team should handle reporting requirements and maintain active communication with FIU India. With proper preparation, your exchange can operate legally, gain user trust, and meet the highest standards of financial transparency.

How Hashcodex help to launch a FIU-Compliant Crypto Exchange 

Hashcodex provides end to end support for entrepreneurs and businesses looking to develop a crypto exchange that fully meets FIU IND compliance requirements. Our team guides you through the entire registration process, from preparing accurate documentation to securing approval for both the reporting entity and the principal officer. 

We design and integrate strong Know Your Customer systems, transaction monitoring tools, and secure data management solutions. In addition, we assist with regular compliance reporting and audits to maintain regulatory approval. With our expertise, you can launch a legally compliant exchange that operates easily and earns the trust of users.

Registered Crypto Exchanges Under FIU IND in India

• CoinX
• Unocoin
• Bitbns
• Zebpay
• WazirX
• Coinswitch
• CoinswitchX
• Rario

These platforms comply with FIU IND regulations, follow strict Know Your Customer procedures, maintain detailed transaction records, and report suspicious activities to ensure safe and transparent trading in India.

Conclusion

Securing FIU IND registration is a vital step for any business planning to launch a crypto exchange in India. It is not only a legal requirement under the Prevention of Money Laundering Act but also a mark of credibility and trust for users. By preparing accurate documentation, following proper registration procedures, and building strong compliance systems, an exchange can operate within the law while safeguarding its platform from financial crimes. 

Hashcodex provides complete assistance in this journey, offering expert guidance on documentation, compliance setup, and technology integration to ensure your exchange is fully FIU compliant and ready for long term success.
Launch your FIU compliant crypto exchange with ease, book your free demo and get started today.