Global Fintech Interview with Neeraj Khandelwal, Co-Founder at CoinDCX

Hi, Neeraj. Please tell us about your journey into the crypto tech world?

I first stepped into the world of crypto and blockchain when I started trading in the crypto market in 2016. I’ve always been interested in exploring emerging technologies and this passion grew further during my time as a university student at the Indian Institute of Technology, Bombay where my Co-Founder, Sumit and I attended cryptography classes and had the opportunity to immerse ourselves in all sorts of new-age technologies. From there, our ambitions grew and we aspired to set up our own startup that could reach an untapped and underserved market in India.

What is CoinDCX?

Our ambitions became a reality when we launched CoinDCX 3 years ago. CoinDCX is India’s safest cryptocurrency exchange and the nation’s first crypto unicorn. We achieved the status of an unicorn following a USD 90 million Series C funding round led by former Facebook co-founder Eduardo Saverin’s B Capital. We are recognised and awarded for our contributions to the Indian emerging tech space, and are proudly backed by other notable investors such as Polychain Capital, Temasek, Bain Capital Ventures, and HDR Group.

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Could you tell us more about your product offering and the markets you are currently playing in?

Currently, we have several products aimed towards crypto investing novices and veterans. For investors who are new to crypto, we have the CoinDCX Go app which offers a simple and safe platform to invest. More seasoned traders can use CoinDCX Pro which has a wider range of features such as Lend, Margin and Futures—that can offer traders more services and access more than 500 markets. We also recognise the importance of education in understanding cryptocurrency and launched DCXLearn—a full-fledged learning programme with courses on crypto and blockchain to combat misinformation and drive public awareness in such emerging technologies.

While we have been primarily focused on the Indian market, the upcoming launch of our latest crypto-to-crypto product offering, Cosmex will bring CoinDCX’s simple and safe products to a global audience, expanding our footprint beyond India. We look forward to providing more liquidity, easier and smoother access, better navigation, and the most competitive trading fees for crypto traders through Cosmex. Watch this space!

Tell us more about the liquidity challenges in the Indian market? What kind of solutions do you offer to solve these liquidity challenges?

When Sumit and I first joined the crypto space, we saw numerous challenges in the sector. In the early days of crypto, the market was highly fragmented. Since crypto was relatively a new concept with few crypto traders, there was little trading volume and liquidity—this was especially so in India. As a crypto trader myself, I struggled with the hurdles of the lack of liquidity and understood the pain points that many traders face. As such, this became the basis to the foundations of CoinDCX where Sumit and I made this a key issue that we wanted to address with our offerings.

To solve this challenge, CoinDCX uses a Liquidity Aggregation Model where we aggregate liquidity from top exchanges such as Binance, Huobi, and Bitmex to provide liquidity to Indian users. On top of that, we also aggregate liquidity from OKEx to provide derivatives solutions. We are proud to be one of the few pioneering this model as a solution to overcome the challenges of liquidity.

How do you compare the crypto market in India with the rest of the world? How is the Indian crypto market shaping amid the backdrop of the ongoing pandemic?

Despite crypto being launched over a decade ago, it is still a relatively new asset class and vehicle of investment, especially for mainstream and traditional retail and institutional investors. While there are a handful of countries—from the likes of Canada, Japan and Singapore—that are more receptive to crypto and have introduced favourable crypto regulations, no country has completely embraced cryptocurrencies like El Salvador which recently announced bitcoin as a legal tender.

In India, the crypto market has been marked by unpredictability and push backs from regulators and policymakers. Previously in 2018, the Reserve Bank of India (RBI) looked to issue a mandate forbidding banks to work with crypto exchanges. Following that, several exchanges—including CoinDCX—filed a petition to overturn the ban. Eventually, India’s Supreme Court overturned the circular and directed the RBI to allow banks to continue working with crypto exchanges. Most recently, several stakeholders in the government voiced their receptiveness to cryptocurrencies and blockchain technology, and looked to work on a new set of regulations to seamlessly integrate crypto into the fabric of the Indian economy.

Since the Supreme Court’s overturned ruling, crypto trading in India has grown exponentially, reaching a nearly 400 percent increase in the past year—even despite the challenges of COVID’s economic impact. Now, approximately 10 to 15 million Indians hold crypto and is a sector with a strong potential to grow further.

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How does CoinDCX help bring greater financial inclusion using Blockchain technology?

At CoinDCX, we are proud to bring greater financial inclusion by granting greater accessibility and creating more opportunities to digital finance through our app and by leveraging blockchain technology. With CoinDCX Go, our mobile app that offers zero-fee charges on deposits and withdrawals, we are lowering the barriers to access crypto on the go. As mobile connectivity is rife in India, being the second largest online market in the world, our mobile app taps into this immense market, allowing customers to access crypto at any time. Additionally, blockchain allows us to scale our processes in trading, allowing faster deposits, and lower trading fees.

With nearly half of India’s population being under 25, the country is still disproportionately young and is an opportunity for the crypto industry to bank on. As more millennials and Gen Zs put trust in tech and are more willing to explore crypto, there is a growing number of younger traders turning to the future of finance. While India has the second largest unbanked population in the world, the growing accessibility to crypto encourages the greater use of digital finance, bringing more people to leverage the benefits of digital assets.

What is LQTH? What kind of technology infusion did you introduce to make it work in the current context of Indian crypto market?

LQTH is a bond-backed token based on a Proof of Stake reserve protocol. With the announcement of Ethereum 2.0, our goal has been to support the upgrade with the launch of LQTH and by providing an ETH staking facility to anyone who holds at least 0.1 ETH in their CoinDCX wallet.

With the barriers of fungibility and longer staking durations, we at CoinDCX is resolving this issue by providing a smart contract-driven solution—where users can stake any number of ETH greater than 0.1 ETH and leverage the LQTH token to protect from inactivity leaks and slashing penalties. To do so, CoinDCX has built an infrastructure driven by smart-contracts that pools funds and sends the batching contract for creating validators. This batching contract then sends funds in multiples of 32 ETH to the validators. Following this, Liqueth tokens are created for the users in the CoinDCX ecosystem. This model has lowered the barriers to staking while providing our customers high liquidity, smart-contract-driven solutions in the lead up towards the ETH 2.0 upgrade.

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Your opinion on the idea of reskilling needed within the Fintech/ blockchain industry for high-growth industries such as banking, retail and digital payments:

With crypto being the future of finance and with the growing central role of emerging technologies such as blockchain in sectors from banking to retail, there is a growing demand for skills in fintech and blockchain. However, blockchain is not a replacement of established processes in traditional industries, but rather a complementary technology that streamlines business, encouraging greater efficiency, accountability and transparency. As we have seen from the crypto rally in 2021, the demand for digital assets will likely continue rising. Especially with the expansiveness of the industry beyond the commonly known virtual currencies, associated sectors such as decentralised finance (DeFi), non-fungible tokens (NFTs), tokenisation and many more, the growing use cases for crypto is evidence of its rapid development and growing importance in today’s economy. With the crypto industry expected to nearly double to reach USD 2.2 billion by 2026, it is a formidable industry that will likely play a key role in the tech, finance and business sectors.

Thank you, Neeraj! That was fun and we hope to see you back on globalfintechseries.com soon.

[To share your insights with us, please write to sghosh@martechseries.com]