Indian crypto exchanges like CoinDCX, WazirX are in survival mode, trying to expand their tracks

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Indian crypto exchanges are in survival mode, cutting costs where possible, renegotiating partner contracts, suspending employee salary increases, laying off employees, exploring new revenue models and rebranding themselves, all with the aim of extending their financial tracks when they are running out of money.

CoinDesk spoke with employees and senior executives from six major Indian crypto platforms CoinDCX, CoinSwitch, WazirX, BuyUCoin, ZebPay, and Giottos. Several of these exchanges have stated that their runs range from 21 months to four years, which, if true, can likely lead them into the next bull market. CoinSwitch and ZebPay did not share their financial timelines.

The survival of Indian crypto exchanges has been a concern since February 1, 2022, when the nation announced high taxes, a 30% tax on crypto profits and the more controversial 1% withholding tax (TDS) on all transactions. At the time, local industry leaders said they had entered a period of pain, but “at the end of the day, technology always emerges, it always wins.”

Signs of crypto brain drain appeared within weeks. Ten days after the taxes were put in place, crypto trading volumes plummeted, in some cases by more than 70%. The Indian government then imposed a “phantom ban, which saw local payment processors cut banking access to crypto exchanges.”

Four months after the 30% tax was imposed, the industry advocacy body was dissolved and law enforcement agencies were investigating at least 10 crypto exchanges for allegedly helping foreign companies launder money through cryptography. Soon the world took notice and global industry leaders such as Binance CEO Changpeng CZ Zhao claimed that Indian taxes would likely kill the industry in the country.

In 2023, data revealed that crypto traffic in the country continued to plunge and Indians moved over $3.8 billion in trading volume from local crypto exchanges to international exchanges.

India, as Chairman of the Group of 20 (G-20) in 2023, has prioritized the development of globally coordinated rules for the crypto sector. As a result, according to experts, it needed to align with the guidelines of global standard setter, the Financial Action Task Force (FATF) on virtual assets by including Indian crypto firms in the anti-money laundering rules. .

The move, which adds some legitimacy to the sector through the establishment of regulatory oversight, has fueled some optimism among Indian exchanges about the longevity of the local industry, even if the nation does not change its regime. tax, according to several industry officials. But they have no answer as to what will happen if the tax regime stays the same and are taking various steps to hedge against such a scenario.

Indian crypto exchange CoinDCX is weathering the storm by diversifying and leveraging its recent $135 million Series D funding.

We have a four-year track, under current conditions, said Neeraj Khandelwal, co-founder of CoinDCX and Okto. Our biggest bet is on our Okto wallet. We believe in DeFi [decentralized finance] will eventually offer 10X value as there are only 6.5 million DeFi customers, while there are 400 million crypto investors.

CoinDCX spearheaded engagement with lawmakers through the industry policy advocacy body, Khandelwal said, exemplified by a recent event, and became a major player in the Indian crypto industry after the recent setbacks faced by WazirX, which has seemingly led the industry in political engagement. before CoinDCX.

Its strategy, says Khandelwal, is to invest heavily in innovation and technology, including hiring in space, even now, because we have never over-hired.

The events saw the exchange lay off 40% of its staff. Still, the exchange has a 21-month trail, said an employee who was not authorized to speak publicly about the company. But employees who deserve raises won’t get them, he said.

WazirX’s survival strategy is to renegotiate contracts with partners, including software companies, the person said. Unlike some other exchanges, WazirX will not diversify. It will remain focused on crypto.

That’s what the Founders inscribed in us, the person said. The idea is to survive because [the] The bitcoin halving will take place in May 2024 when we hope a bull run will occur. Until then, if things don’t break, we should be here to see it. The bitcoin halving occurs when the total number of bitcoins miners can potentially earn is halved. This happens approximately every four years.

WazirX also plans to continue to consistently cut costs to expand the runway and capitalize on its 15 million registered users to attract lucrative partnerships, such as a recent one with tax solutions provider TaxNodes.

CoinSwitch ditched Kuber from its former name, CoinSwitch Kuber, and transitioned from a crypto exchange to a crypto investment platform.

This came as Indian taxes, the crypto winter, and the wrath of Indian agencies all hit the platform hard. CoinSwitch properties were raided by Indian agencies in August 2022.

CoinSwitch has always been conscious of its expenses, said Ashish Singhal, co-founder and CEO of the company. Today we are proud to serve over 19 million registered users and are excited to grow and evolve with them by offering a diverse range of investment options including Fixed Deposits (FD) , mutual funds, Indian stocks, etc.

Without giving a timeline on his track, Singhal said our healthy track gives us enough ammunition to invest in our long-term vision of being a one-stop wealth technology destination for Indians.

Singhal also said his company has bolstered its management team by hiring industry experts, presumably to navigate regulators, though he added that the recent step to subject crypto firms to anti-corruption rules. laundering was a significant positive step forward.

One of India’s first crypto exchanges, ZebPay, also declined to share a timeline on its trail. But chief revenue officer Nirmal Ranga said he had the backing of an unnamed subsidiary in Singapore, in case it lost customers, the bear market widened or things generally went from bad to worse. .

Our internal revenue strategy is to increase the loan value of our customers and focus on user growth, Ranga said. We also try to generate interest in institutional investments.

Since the ZebPays team has seen cryptos in the early and bearish cycles, it follows two ways to survive using profits made from previous bull runs or using funds from marketing partnerships or investors , Ranga said. Like WazirX, ZebPay also has a partnership with TaxNodes.

Another early mover in the Indian crypto space, BuyUCoin, said its trail extends to early 2025.

By the end of 2024, we will see a good bull run, said Atulya Bhatt, its co-founder. Crypto is a seasonal market and every four years bitcoin goes up and down. It will take 10 years for crypto to become fully sustainable.

Nonetheless, BuyUCoin had to lay off 10% of its 100 employees, Bhatt said. At the same time, BuyUCoin established sister companies in Estonia and Singapore as part of a global expansion plan.

As we have never raised funds, we can now, given the interest of partners around the world, he said.

After the FTX implosion, crypto entities rushed to release evidence of reserves. Giottos, a lesser-known Indian exchange known for its staking service and multilingual options in the country, said it would provide clients with proof of reserves, while rivals remained silent.

We have a two-year track under current conditions, said Vikram Subburaj, co-founder and CEO of Giottos. Our goal is all about delivering operational excellence, building your products right, dramatically reducing marketing and acquisition spend, and reducing the perceived risks associated with trading.

In terms of employees, Subburaj said Giottos has a compact marketing team even during bull runs and like others he has partnered with TaxNodes to improve operational support.

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