MC Interview: We can build in India for the world, says CoinDCX’s Sumit Gupta

Sumit Gupta, co-founder and CEO, CoinDCX

Just like its rival CoinSwitch, crypto exchange CoinDCX too diversified and embarked on its journey to become a Web 3.0 focussed company amidst regulatory uncertainties and a slowdown in the crypto sector in India.

Exactly a year ago, CoinDCX launched its ambitious bet, a self-custody wallet product, Okto. At present, Okto is used by over 1,00,000 people globally in over 60 countries. The product is adding 2,000 – 3,000 new users every day, CoinDCX’s Co-founder and CEO, Sumit Gupta, tells Moneycontrol.

Gupta believes Okto will drive mass adoption by simplifying real applications and use cases of Web 3.0 starting with DeFi (decentralised finance) and NFTs (non-fungible tokens). In an interview with Moneycontrol, Gupta shares his game plan for building CoinDCX over the next two years, concerns around existing taxes and policies, optimism on the India market and more.

Last valued at $2.15 billion following a $135.9 million funding round led by Pantera Capital and Steadview Capital in 2022, CoinDCX is currently the highest valued crypto start-up in India.

Edited excerpts: 

You launched a self-custody wallet Okto last year and are betting big on it. Tell us about the product and how it is different from the existing wallets in the market? 

We need to take a step back and understand the problem areas. All of us fundamentally understand that technology is powerful, but when it gets into the hands of common people, there are a few problems that need to be solved. And one of the most important problems that need to be solved there is user on-boarding. There needs to be a solution that allows customers to experience Web 3.0 in the simplest way possible. And Okto is a product which exactly solves that.

Also Read: Crypto exchange CoinDCX lays off 12% of workforce

If you want to access a DeFi protocol in the current world, outside Okto, you will have to go through a 10-step journey, like you have to install a meta mask, backup data etc. and one mistake can put your funds at risk. So Okto leverages multi-party computation (MPC) technology, which simplifies the experience so that my mom and dad too can access Web 3.0 files on their mobile phones in their pocket whenever they want to, without the risk of making a mistake and losing their funds.

So, any Web 3.0 applications can be brought and connected with Okto in a matter of a few days.

What’s the revenue model for Okto?

At the moment, we are not optimising for maximising revenues. Right now we want to on board a million customers and add a million wallets. And then later on, we will explore interesting revenue models, because in the long term, the on chain transaction fees we believe will drop significantly. And transactions will become a lot cheaper. And that is the time when we will start focusing on what could be interesting revenue models that can be scaled.

As of now the focus for the team is to build a simple and safe product.

You recently laid off around 12 percent of your workforce to restructure. What’s the plan now? What will be the key business focus areas for CoinDCX over the next two to three years?

There is no change in our plans. In fact, we have taken some more aspirational projects, Okto being one in terms of (expansion to) global markets. And we are doubling down on it, going deeper there. The 12 percent restructuring was primarily done with an intent to make things a lot more efficient, where we have already done a lot of automation. And some of the roles are redundant now, that is where we have done those optimisations.

Over the last four-and-a-half years, we have done several automations whether it comes to customer support or in other functions…It's also a part of just making sure that the company is running efficiently. And we have a strong focus on achieving profitable and sustainable growth. But in terms of plans, we have in fact taken more aggressive bets even with a small team size.

Could you share some of those plans?

While we have built all of these things from India, we don't want to limit it only to India.  And we are very, very bullish on the India opportunity… I think there is nothing new we have to build, the same can be very well deployed anywhere. We can build in India for the world. That's basically a broad theme we are working on as a company. Over the next one or two years, we are moving in that direction, there are products that already live in global markets.

As a team, I want to highlight that we want to become a company which has gone out of India and created a mark globally as well. We have seen in Web 2 that there are US companies that are serving Indian customers, but the trend will reverse in Web 3.0.

Which are your biggest markets outside India at the moment?

Okto is pretty much live in over 60 countries now, so which markets we will focus on depends on the traction we get in some of the markets we have identified that are picking up really well and where crypto adoption is high, including India. If you see the latest Chainalysis Report, India ranks number one and there are markets like Vietnam, Nigeria, which are bigger. So I think it's a function of adoption, wherever we see adoption happening faster we will see more customers coming in from that market as a product. In terms of our focus areas, we will align our focus on some of the markets that are already identified, based on early traction.

We will start with more deeper campaigns on that in the Q1 of next year.

When do you expect the turnaround in the crypto industry in India? Is it happening anytime soon?

Right now I'm happy to see that crypto as a subject is no longer a small issue, it has been taken up in a global forum like G20. There’s no ban happening as per the conversations. Keeping this in mind, I think that's good progress. What I'm not happy about right now is the TDS part and the tax treatment for the industry is something which is still not solving the purpose. The purpose of bringing this was to track and trace transactions, but I think what has happened is it creates arbitrage in terms of domestic exchange players and international players, where international players are not even applying or following those compliances.

It’s not like volumes have gone down in India just to be clear, instead, volume has moved offshore outside the Indian territory, to places which are not complying with TDS, and because there is no one percent TDS, customers can make multiple trades. That is the reason why we see volumes on Indian exchanges declining, but if you connect the dots, India being number one, in terms of adoption, yet domestic exchanges doing less volumes.

What were your takeaways from the G20 synthesis paper? How did your conversations with the government bodies go?

There are some broad principles that were highlighted and based on that every country will go back and align on a global consensus and regulations. Of course, every country has their own nuances depending upon whether they are developed or emerging nations. I expect that over the next two years, by the end of 2025 is when most of the G20 nations will have a laid out framework. I'm not sure if they would like a license. But in terms of guidelines, I expect two years is a good enough time period. I think that is when you will start seeing momentum in this industry. Post the US elections and India elections in the next 12 to 24 months is when we will see more activity.

Though India has one of the strongest developer bases globally, we haven’t seen any prominent web 3.0 start-ups and ideas coming out of India yet. How are you assessing the market opportunity?

Yeah, I still continue to believe that India in the long term is going to be a huge market for Web 3.0. All the data points are directed towards this. To grow an ecosystem, you need people who are able to build products, and people who are able to consume those products and that creates the cycle. India actually has it. It is one of the top three countries in the last few years in terms of developer base. And with increasing regulatory clarity, I expect the developer count and people getting into Web 3 will also to ramp up. Of course, some of that will move to AI and all of that, but still people are excited about it.

CoinDCX Ventures planned to invest Rs 50 crore in 2023. We are just two months away from the end of the year. What’s the update? Have you found any good themes to invest in?

We are regularly following it. In terms of investing, we are more focused on quality than quantity. Or we're also focused on quality. The number of deals we were getting each month have halved, but the quality of start-ups we get is improving. So we continue to evaluate companies and invest in companies. The pool that we've allocated is still carved out to invest in companies both in India as well as globally. So that's work in progress. The activity has slowed down a little bit because of the ongoing bear market.

Themes we are seeing are broadly around infrastructure, such as L2 blockchains trying to solve issues of adoption and mass applications and finding solutions for high transactions per second. Real world asset, DeFi will take off in a big way in the next bull cycle.