CoinSwitch in talks with RBI, SEBI to launch financial products, exploring NBFC licence: CEO Ashish Singhal

Ashish Singhal, Co-founder and CEO, CoinSwitch

Crypto investment platform CoinSwitch is actively talking to market regulator Securities and Exchange Board of India (SEBI) and banking regulator Reserve Bank of India (RBI), ahead of its diversification into a wealthtech platform, co-founder and CEO Ashish Singhal told Moneycontrol.

The platform is also exploring partnerships with non-banking financial companies (NBFCs) and is applying for an NBFC licence to offer fixed deposits and related banking products.

As a comprehensive wealthtech platform, CoinSwitch plans to launch at least seven financial products, including fixed deposits, mutual funds, bonds, stocks and exchange-traded funds (ETFs), by the end of this year.

This comes at a time when Indian crypto startups are increasingly finding it difficult to sustain core business amidst regulatory uncertainties and high taxation, leading to crypto trading volumes plunging by over 85-90 percent.

Speaking to Moneycontrol, Singhal said: “SEBI is the only regulator for any product that we are launching. For fixed deposits, RBI is the regulator…We are in touch with all of them. I cannot comment on the details right now, but I can definitely tell you that we are actively engaging with all the related parties, not just with regulators, but also our partners as well, who can allow us to launch these products on our platform.”

Though Singhal declined to disclose more details at this point, he shared that some of the products mentioned above are already in the testing phase. CoinSwitch is experimenting with users and gathering their feedback and reactions to these products.

For the long term and for adding more banking-related products, Singhal said he will be exploring both the partnership route with NBFCs and applying for an NBFC licence, as both approaches will have different nuances and allow CoinSwitch to offer different features.

“If we go with a partner, we’ll have a fixed set of features that our partner has built. But if we apply for our own licence, we can structure the product in the way our users actually want…So we are approaching it both ways -- one is a longer path and the other is a shorter path to market. So there's always a time- to-market kind of equation that comes into picture. We are exploring both, haven't finalised yet,” he said.

Regulatory concerns

While a promising idea on paper, selling crypto, which is not yet fully regulated alongside financial products, and which have stringent regulations to adhere to and regulators closely tracking it, won’t be that simple.

The RBI has tried to ban crypto in the past and continues to constantly caution about private crypto tokens and other virtual digital assets (VDAs) causing the next financial crisis, following the collapse of crypto exchange FTX.

How these products and businesses will be offered and structured under the same platform as well as the same parent company will be interesting to see. Singhal said CoinSwitch, too, is figuring those aspects at the moment. He drew parallels with other fintechs, including Paytm and PhonePe.

“I think these are a few nuances that we are working out. We still don't have 100 pecent clarity. We are not the first ones in the industry to do it. Paytm has done it, PhonePe has done it. Obviously, we come with a crypto tag, so it's a little complex in our case, but it's not that, other companies haven't found those routes. Paytm sold gold which was unregulated and then got into mutual funds and are doing amazing in stocks as well, similar to many other companies in India,” he said.

“So, there are routes that exist which most companies have followed -- creating separate entities for every investment asset class. You have to make sure that the user data and the process of an entire investment in that asset class remains within the Chinese walls and regulators are okay with it,” he added.

Given the clear competition in this space, Singhal wants to differentiate by targeting the user base who are new to investing and aren’t aware which stocks or mutual funds to invest in. CoinSwitch wants to simplify and help these users with investment decision making and getting them to start on actual investing.

CoinSwitch rebranded its logo and app in December 2022 to shift into wealthtech. Since then, though the company has seen an 80 percent retention rate with existing users, new user sign ups and app download have significantly reduced.

Singhal said CoinSwitch went from being one of the top 10 fintech apps to be downloaded to not even being in the top 50 due to increased concerns around the sector making retail investors cautious.