We recently connected with Neeraj Khandelwal, Co-founder of CoinDCX, one of India’s largest digital asset exchanges. As covered in August 2021, CoinDCX turned into India’s first crypto unicorn following a $90 million investment round led by Facebook Inc. co-founder Eduardo Saverin and B Capital Group
In January 2022, CoinDCX appointed Divakar Prayaga as SVP and Head of Information Security. Earlier this month, the digital asset firm announced that it has chosen crypto-native risk monitoring company Solidus Labs as a strategic compliance partner.
Our conversation with Neeraj Khandelwal is shared below.
Crowdfund Insider: What are CoinDCX’s growth objectives and key priorities for 2022?
Neeraj Khandelwal: CoinDCX has tracked a steady growth trajectory, expanding its user base by 71 times from the end of 2020 to today. For a relatively new company launched just under four years ago, this is a solid achievement.
Looking ahead, we will continue to strengthen our security capabilities so that our customers can trust that they are trading on the safest and most reliable crypto platform. Contingent to our goals, we recently partnered with crypto-native trade surveillance and market integrity leader, Solidus Labs to strengthen our anti-money laundering protection, and provide precise and holistic detection and reporting into suspicious activities.
We have already partnered with cybersecurity firm BitGo and KYC and user verification provider, Onfido, and we will continue fortifying our security and safety capabilities to cater to our growing user base – this is crucial in CoinDCX being accountable for our position as India’s safest crypto exchange.
As we aim to make crypto more accessible to Indians, our current growth sets us on the path to hit approximately 40 to 50 million users by the end of 2022. While this is just a projected number, it is an aspirational growth that we are aiming to reach and will be able to do so with a strong education, favorable policies, and support from regulators to further innovate, as well as a formidable platform to imbue security and trust in the industry.
Crowdfund Insider: What is the current regulatory climate like in India?
How have businesses been operating given the RBI’s lack of clarity regarding how to regulate digital currencies?
Neeraj Khandelwal: Despite facing regulatory uncertainty for several years, the Indian government is taking steps to embrace digital currencies. The Reserve Bank of India (RBI), for example, is also becoming more accepting of crypto and has set up a fintech division to keep pace with the digital asset industry. Furthermore, the government introduced taxation on crypto-related transactions—a move that has been welcomed by India’s crypto community as it brings greater recognition and legitimacy to the industry at large.
While all signs are encouraging thus far, the high tax rate of tax is also a double-edged sword and could become a barrier to greater progress and innovation in the sector. Especially with the nascency of the crypto and blockchain industry, a hefty tax might impede adoption.
While it is encouraging to see that major developments have eased some uncertainties in India’s digital asset sector, there is still an opportunity to provide greater clarity for tax-deductible at source (TDS) in terms of how the tax will be applied and deducted in the case of crypto-to-crypto trades. However, we are still early into the mainstreaming of crypto in India and we are looking forward to greater regulatory developments that will serve to develop the space further.
Crowdfund Insider: Staking crypto-assets has become a key part of many digital asset platforms. How do you see this industry segment growing in the coming years?
Neeraj Khandelwal: The staking sector has been a significant part of crypto, accounting for over 50 percent of the industry’s total market cap last year. It is set to become even greater with the launch of Ethereum 2.0 that is expected to grow the staking industry to be worth US$40 billion by 2025.
With its greater efficiency and sustainability, it is quickly becoming a lucrative alternative for exchanges and investors. This is also a reason why CoinDCX was quick to build our staking capabilities in preparation for the rollout of ETH2.0 in 2021, providing an opportunity for users to enjoy the benefits of staking smaller sums of Ethereum without worrying about the large capital requirement of 32 ETH that is needed for staking. Similarly, as a service to our users, we have also enabled Staking reward distribution across a variety of tokens as well.
Crowdfund Insider: What are your thoughts regarding global crypto adoption and India’s role in the crypto-economy?
Neeraj Khandelwal: India is the world’s second-largest crypto adopter, outranking some of the biggest economies. Despite facing crypto regulatory hurdles and pushbacks, investors are confident of crypto’s potential in India and have invested US$587 million in funding last year—the highest amount to be raised for the sector. Furthermore, India’s crypto ecosystem is expected to grow to US$241 million by 2030, adding nearly a million jobs to the economy.
As the sixth-largest market in the world, India is already an influential player in the global economy. Now, with its formidable crypto industry, India’s digital asset sector will hold a leading position in shaping global crypto adoption. Adding to that, Prime Minister Narendra Modi has urged countries to work together to synchronize global action to regulate cryptocurrencies at the World Economic Forum, playing a leading figure in moving the dial on the global crypto front.
Historically, India has always been a tech capital and its foundations in the sector have given it added leverage as it embraces crypto. With all eyes already following developments in India’s crypto regulations, and with the prominence and potential of its digital asset industry, it is no doubt that India will become a crypto capital.
Crowdfund Insider: Bitcoin and Ethereum have emerged as a potential hedge against the traditional financial system.
What are you doing to educate and help your clients better understand virtual currencies and their value proposition?
Neeraj Khandelwal: Crypto education is a key component of CoinDCX’s business and the core of the digital assets sector. With regulatory pushbacks often arising from misconceptions and misinformation, education is paramount in understanding the future of finance and encouraging greater adoption. Education is complementary to responsible advertising, especially since it is closely related to raising awareness and fostering a better understanding of crypto.
This is why we launched DCXLearn, a full-fledged crypto learning program. It is an immersive and comprehensive crypto and blockchain education platform which offers free courses on the subject, teaching Indians the fundamentals of blockchain technology and crypto projects.