Driving Cryptocurrency Adoption
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Sumit Gupta’s tryst with cryptocurrencies began in 2014 as a trader. This was the time when bitcoin, the most popular cryptocurrency, had its first run up with its price increasing nearly 18-fold in a year and subsequently, investor’s frenzy around cryptocurrencies peaked.
When Gupta operated across several exchanges globally to trade in the digital tokens, he was confronted with many pressing issues ailing the ecosystem: lack of liquidity in the market, massive spread and slow order execution.
This prompted Gupta to reconnect with his friend from IIT-Bombay, Neeraj Khandelwal, who was also actively trading in cryptocurrencies at that time, to brainstorm on a product that could bridge these key market gaps for cryptocurrency traders and investors in India.
This led to the genesis of CoinDCX in March 2018.
“Through CoinDCX, we wanted to offer its traders an opportunity to trade inexhaustible and without limit with a robust order book,” says co-founder and CEO Gupta. “We brought highest liquidity into the Indian market by introducing the world’s top cryptocurrency exchanges like Binance, Huobi Global and HitBTC in the country.”
Before establishing CoinDCX, Gupta had also co-founded ListUp, an auction-based price discovery platform for second-hand electronics.
Journey so far
CoinDCX started as a lite cryptocurrency exchange to address the core issue of lack of liquidity in the market. “We started off as a crypto-to-crypto (C2C) exchange, offering a marketplace where buyers and sellers could come together to exchange cryptocurrencies,” says Gupta.
The company succeeded in resolving the issue of liquidity to a large extent by bringing top global exchanges under one fold in India.
Taking a step forward, the company also introduced fiat-to-cryptocurrency feature called Insta in the same year, which helped users to buy cryptocurrency in fiat. Over the years, the company has constantly innovated and built a diverse suite of crypto-based financial products and services.
To name a few, users can lend their crypto assets and earn up to 12 per cent interest through the platform’s Lend feature. Another feature called Stake lets users earn passive income by holding their cryptocurrency and margin offers users six times leverage trades on over 250 coins.
“While designing our products, we take into account the various types of traders operating in our space, their trading experiences, their ability for risk tolerance and the frequency of their trading,” says Gupta.
In under three years, CoinDCX claims to be India’s largest cryptocurrency exchange in terms of volume, liquidity and by bringing all crypto-trading products under a single roof. The company claims to process daily trading volume of about $15 million and has a user base of over 200,000 investors and traders.
Building a company amidst hostile regulations
The Reserve Bank of India (RBI) and the government have been skeptical about the digital tokens since the beginning. In an extreme move, in April 2018 the central bank had barred all banks and financial institutions regulated under it from dealing in transactions related to cryptocurrencies.
It was a turbulent time for CoinDCX as the directive came just one month after the company started operations. “It was doubly hard for us and other exchanges that had been operating for a while as we had to either scale down their operations or had to opt for a complete shutdown,” says Gupta.
Moreover, as the ban attributed a negative connotation to the industry, not only did small investors shied away from investing in the digital token, it became difficult to even get the investors to commit in the absence of a clear regulation. “While most investors realized India’s potential owing to its high mobile penetration rate and highly talented tech workforce, investors did not want to move into a country where there was an outright ban,” recalls Gupta.
But, the company held ground and continued building CoinDCX to ensure that their users and stakeholders saw the value in what they were doing and wanted to achieve, adds Gupta.
In fact, one year after the company launched its operations, CoinDCX raised seed funding from Sanjay Mehta (founder and partner at 100x.VC) and Utsav Somani (partner at AngelList India) and international investor Bain Capital Ventures.
In March 2020, the Supreme Court struck down RBI’s order, which was a major turnaround point for CoinDCX. “The decision provided a morale boost to the cryptocurrency community in India and resulted in many positive developments in the country’s cryptocurrency ecosystem,” says Gupta.
During the COVID-19 induced lockdown, the company claims to have grown exponentially. In the April-June quarter, the exchange clocked three times growth in the overall volume traded and four times quarter-over-quarter growth in daily active users. Overall, in Q2 and Q3, CoinDCX saw 12 per cent increase in signups and 20 per cent increase in volume. Further, it recorded 21 per cent month on month (m-o-m) growth in trade volume and 25 per cent m-o-m growth in the number of users, in October when the current rally in bitcoin price took off.
The company has also raised a total of $19.4 million in external funding across three rounds in 2020. “We have also tripled our workforce from 30 in March to 90 in December,” says Gupta, detailing the company’s growth in the pandemic year.
On being asked how difficult it has been to build a venture in a space with hostile regulations, Gupta says running a crypto-related business is a challenge not only in India but globally. “I think regulatory policies, lack of knowledge and clarity about taxation-related issues are the biggest challenges for anyone operating in this space anywhere in the world.”
Sumit Gupta made it to the list of Entrepreneur India’s 35Under35 list of 2021.