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NEW DELHI : India’s first crypto unicorn, CoinDCX, has raised $136 million in a Series D round at a valuation of $2.15 billion at almost double the valuation of $1.1 billion in its last funding round of $90 million. It is now the most valued crypto platform in India, ahead of CoinSwitch Kuber, which was valued at $1.9 billion in October. In an interview, CoinDCX co-founder and chief executive Sumit Gupta explained why Indian investors are still bullish on the crypto ecosystem despite regulatory uncertainties. Edited excerpts:

Could you give us details of the latest round of funding?

The latest round was led by Pantera and Steadview, along with participation from Kingsway, DraperDragon, Republic, and Kindred. There was a 6% dilution. After this round one-third of the equity is still with the founders (Gupta and Neeraj Khandelwal), which I believe is a very healthy situation to be in. The rest is with the employees, as an Esop pool, as well as with investors. This was a heavily oversubscribed round. We were not initially planning to raise funds. It’s just that the investors had confidence in the Indian market and in our approach. So, this deal went through, and we partnered with them from a long-term perspective. This is basically a testament to the fact that India can give rise to not just one or two unicorns, but dozens of unicorns.

How will you deploy funds?

We plan to come up with one-of-its-kind offerings deeper into crypto and not just those that are limited to buying and selling. One example is a product we launched less than a month ago, the crypto investment plan, which involves systematic investing over a long period. More than 100,000 people have already tried it out. The plans will be revealed in coming months, but products like these will get a lot of traction and it is just the start.

We also want to work on the talent supply problem. There are limited people in India who understand this space well. There are a lot of foreign companies that are trying to tap the same talent pool. So, there’s heavy competition and this is not sustainable in the long term. So, we are also trying to figure out ways to solve this talent problem. Besides, we also plan to triple our team from the existing strength of around 400 people by the year-end. Hiring will be across functions such as product, compliance, growth, and marketing, but largely in engineering.

What’s driving investor interest despite regulatory uncertainties?

Regulatory ambiguity will be there in the short term. However, investors don’t take a one- or two-year view. They take a much larger view. They’re quite positive about the Indian market, especially because of the rate of adoption they have seen in terms of new people coming into the space. These investors are not witnessing regulatory issues for the first time. They have seen the same story play out in Western countries. First, there is adoption, then the industry grows to a good level, then the government comes up with the right policies. Once that happens, the growth rate of the Indian crypto ecosystem will be mind-blowing.

Do you see any solution to the recent banking issues?

I think the recent issue came up after the Coinbase launch event, after which NPCI came out with a circular on the UPI usage. I think banks are still keen on partnering with crypto companies, but there’s still some sort of confusion or chaos that got created in the last few weeks that led to this UPI issue. But UPI has always been a challenge. We have always been trying to get a seamless UPI system, but that has been on and off. As we speak, we are regularly in touch with different stakeholders so that how can make payment flows seamless. It’s something that we’re actively working on and I think in the coming weeks or months, we will see some solutions to that.

What are your views on the recent plunge in trading volumes?

The fall in volumes is global and not just limited to India. Of course, India has challenges that have contributed to the drop. We have also seen a roughly 30-35% drop in volumes over the last one-two months. The first reason has to do with the market, where bitcoin has been trading flat at around the $39,000-40,000 level over the past few months. The second is that top traders, which usually contribute 80% of the volume have slowed down. Still, we’ve seen new people coming and joining our platform; however, the rate of growth is not as high as it was a few months back. The third reason is the prevailing confusion around the offsetting part of losses in crypto in India. Even though the tax guidelines are there, which is quite a positive sign, the interpretation of that is still not very clear.

What are the challenges you think the government is facing in coming up with regulations?

I think the crypto space is a little complex in nature. One key challenge is to keep up with the pace of the industry. Two years back people even didn’t know about decentralized finance or non-fungible tokens. And I think it’s not a good idea to have a very rigid regulatory framework for a space that evolves really fast. The right way forward is to have soft-touch regulations. Another challenge is that, fundamentally, crypto is a global asset class, and you cannot limit it to one country or one jurisdiction. India is one of the few countries which have very tight capital controls. So how do we solve that? Also, the government needs to see how Indian investors can be protected from volatility in crypto assets, to standardize the know-your-customer (KYC) guidelines across all the platforms that have different tokens listed.

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