The $6.3 billion theft from Binance, the world’s largest cryptocurrency exchange, offers India a warning about digital assets. It shows neither that cryptocurrencies must be banned nor that exchanges can be trusted to regulate themselves. It shows why enforceable investor safeguards matter.

Hackers struck on October 29. Binance subsequently drew on its Secure Asset Fund for Users, futures insurance reserves and corporate funds to replace affected holdings. On November 12 it took a fresh proof-of-reserves snapshot, and it later announced that replenishment was complete. Replacing customers’ assets, however, is not the same as recovering stolen funds. Nor does an exchange’s ability to absorb an extraordinary loss…