One of India’s largest cryptocurrency exchanges, CoinDCX, has raised $3 million from backers including Bain Capital Ventures, signaling that global investors are drawn to the space after a favorable Supreme Court decision.
The virtual currency trading platform said it would use the funds to promote adoption of cryptocurrencies as well as boost product development and marketing. Investors in the funding round included veteran crypto investor Polychain Capital and HDR Global Trading, which operates the crypto exchange BitMEX.
CoinDCX’s Series A funding came just three weeks after a group of cryptocurrency bourses won a major victory in the Supreme Court — one that removed restraints placed by India’s Reserve Bank in April 2018 that had effectively outlawed virtual currencies for nearly two years. CoinDCX said user numbers had jumped about 10-fold since the ban lifted.
“India is a market with a huge potential for cryptocurrencies,” said Sumit Gupta, co-founder and chief executive officer of CoinDCX. “Crypto as an asset class is poised for takeoff.” The country has a couple hundred million unbanked citizens and a massive dollar remittance market that make it fertile territory.
CoinDCX plans to allow more users to get on board by buying crypto with more fiat currencies and will also build algorithm-based trading. It intends to introduce a crypto-to-crypto trading product later this year. Presently, users of the platform can trade digital currency spot and futures contracts.
Gupta opened CoinDCX for business just months before the Reserve Bank ban. It began peer-to-peer trading to keep itself afloat.
“We were one of the three exchanges that stayed operational during the ban,” Gupta said.
The funding signals hope for an industry that floundered in the last two years amid the ban, during which time several exchanges had to shut up shop. Liquidity fell drastically and it became challenging to operate the business.
But the court ruling has users flocking back to the exchanges, and CoinDCX became the first cryptocurrency exchange in India to integrate bank account transfers and allow users to instantly buy and sell cryptocurrencies with Indian rupee. It has pledged $1.3 million to a campaign entitled TryCrypto, which aims to bring the total number of crypto users in India to 50 million. Currently, the number is estimated to be a tenth of that.
Others are eyeing the space as well. CoinRecoil, another exchange, said it would be approaching potential investors following the lifting of the banking curbs. American investor Tim Draper has said he wants to fund cryptocurrency startups in the country. Global blockchain player Binance Holdings Ltd. through its local subsidiary announced a $50 million fund to revive growth in blockchain and cryptocurrency startups. Facebook’s Libra, which has faced resistance from regulators and governments around the world, could look to enter and prove its versatility in an emerging market like India.
Meanwhile, India’s central bank itself has explored creating a sovereign-backed digital currency even as it clamped down on private cryptocurrencies such as Bitcoin, saying they could be used for money laundering and other illegal activities.