Going Beyond Crypto: Why CoinSwitch Puts Compliance Before ‘Quick Growth’ Hacks

Cryptocurrency is not illegal, but it isn’t legal, either.

The fate of cryptocurrencies in India stays cryptic in a largely unregulated environment, despite repeated scams taking a major toll on investor confidence. While the government’s plan to float its very own digital currency adds some faith in the digital asset, raging headwinds of malicious trade and unfavourable macro fundamentals have deepened the uncertainty in the market. Only a few homegrown companies have stood firm even in such times of turbulence. 

“Stability is what we need at this hour,” believes Ashish Singhal, who cofounded CoinSwitch, which is one of the only two cryptocurrency unicorns in India.

Singhal, who is also the co-founder of the crypto exchange and aggregator, hopes that the government will soon bring in regulations and then, it’s all about compliance. “It’s a game of patience. We’re dealing in a new-age product that is yet to be understood by a wider mass. The situation is improving and I’m sure it’s going to get momentum very soon.” 

While sticking to its transparent business model which, according to him, gave CoinSwitch Kuber the strength to face the volatile environment, the company has expanded into other fintech verticals like wealth management.

“If we believe in stability, then we must make our core business operations more stable before we jump on the fintech bandwagon rushing for public listing,” says Singhal. 

The Bengaluru-based company has been trying to rebuild investor confidence and is also leading awareness in cryptocurrencies working under the purview of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India RBI (SEBI).

Singhal was one of the cryptocurrency leaders in India to speak for the victims of the $230 Mn hack on WazirX in 2024. In a freewheeling chat with Inc42 as part of the Griffin Dialogues series, he shares how he would have handled the situation differently. 

“If a company isn’t able to cover the full extent of the losses immediately, it should still take partial responsibility. Like managing part of the repayments from the company’s treasury, and the rest perhaps through shares in the company or future revenue streams,” he says.

Edited excerpts 

Inc42: Regulations around crypto assets have stabilised to some extent. What kind of impact do you see on the crypto industry in India?

Ashish Singhal: The re-election of Donald Trump has definitely made things better for the crypto community. His supportive stance on crypto assets could inspire other countries to adopt more favourable regulations as well. In fact, we’re already seeing this happen. 

Earlier this week, Department of Economic Affairs (DEA) secretary Ajay Seth said the government is revisiting its discussion paper on crypto based on recent developments around the world. The government’s view is also changing gradually. A few years back, the conversation was majorly about whether to impose a complete ban on crypto. But today, the focus has shifted towards creating a proper policy framework. 

We have also seen some concrete steps in this direction such as a tax system for crypto transactions, which requires exchanges to register with the Financial Intelligence Unit (FIU), and even drafting of a detailed discussion paper on digital assets.

While the government is still taking a cautious and careful approach, these developments show that the regulatory environment is maturing. This is a positive sign for the long-term, sustainable growth of the virtual digital assets (VDA) industry in India.

Inc42: We’ve seen a lull in VC funding for the crypto industry. Do you see any likely revival in the VC sentiment for the crypto industry in India?

Ashish Singhal: The Web3 sector in India is mainly hamstrung by the lack of regulation. We know this is a new version of the World Wide Web that uses blockchain technology and decentralisation. While it is completely legal to invest or trade in crypto, we could use more regulatory clarity and better tax structures to unlock its true potential.

The crypto industry has incentives built into it, so venture capital doesn’t need to come from traditional VCs only. Anyone can back a project for as little as INR 100 and that’s the beauty of tokens. If you think a project has potential, you don’t need to be a high net worth individual or an accredited angel investor to back it. By simply buying the token, you can invest in the project.

So, when you see the markets going up, when users are buying tokens or cryptos, you’re essentially seeing hundreds of projects raising venture capital from millions of investors around the world.

Inc42: Are you looking to raise further capital or planning a public listing? 

Ashish Singhal: We believe securing stability is the most important aspect at the moment for the business. Accordingly, our primary focus is to build and enhance features across CoinSwitch and Lemonn to make investing simpler and more accessible. This will help us build a more stable position in the market. At this stage, we are well-capitalised and not looking to raise further capital or considering an IPO. However, we remain open to possibilities and may revisit this conversation in the coming years.

Inc42: Coming to wealthtech, we have seen a lot of activity on this front through the last two years. You have designed an all-new platform for this. How has the business fared so far? 

Ashish Singhal: We ventured into wealthtech space with Lemonn in 2024. Our platform is designed with focus on new investors, reflecting Lemonn’s commitment to clarity and simplicity.

Only about 6% Indians invest in stocks today. We aim to raise this number and make investing as accessible and effortless as possible. The features are customised, targeting the needs and requirements of new investors, and helping them with discovery and decision making.

We noticed that many users were looking for well-researched, easy-to-understand stock recommendations. So, we introduced the ‘Analyst Rating’ feature, which shares curated stock picks from 40 experts. It’s been a hit as 29% of our users rely on these recommendations to guide their investments.

In less than a year, we’ve launched a wide range of products, including stocks, mutual funds, IPOs, F&Os, and margin trading facility (MTF) on the platform. Last month, Lemonn crossed 1 Mn users and is now among India’s top 50 brokers. This growth reflects the trust our users have placed in us, and we’re just getting started.

Inc42: As you expand into a wider ambit, you need to recast your business as well as the human capital. How have you gone into restructuring the workforce and the verticals over the past one year?

Ashish Singhal: Our organisational structure is straightforward and designed to foster growth and innovation. PeepalCo serves as our parent brand that supports the development of distinctive brands under one unified umbrella. Each brand operates in autonomy so that they have enough room to innovate and move faster.

Under PeepalCo, both CoinSwitch and Lemonn operate as thriving independent brands, each led by a dedicated leadership team. Balaji Srihari heads CoinSwitch and Lemonn is led by Devam Sardana.

Inc42: What cultural values or practices have you implemented to ensure Coinswitch remains agile and innovative even as it scales?

Ashish Singhal: At PeepalCo, we believe that a company’s culture is the foundation of its agility and innovation. As we scale, we remain committed to a dynamic, customer-first mindset, ensuring that we don’t just grow – we evolve with purpose. As an organisation, we have six core values. These aren’t just words, they are the principles that keep us agile, innovative, and focused.

• Crazy about customers: Our success is measured by our user experiences. We take their challenges personally and go the extra mile to solve them, ensuring that investing is seamless, secure, and accessible for all.
• Where logic meets magic: Innovation thrives at the intersection of data-driven insights and bold ideas. We ground our decisions in analytics while embracing creativity to redefine what’s possible.
• Lights, cameras, bias for action: While we think deliberately, we act decisively, leading by example and turning ideas into impact.
• No hate, just innovate: Disruption happens when diverse minds come together. We foster an inclusive, positive culture where differences fuel innovation and everyone has a voice.
• Stand up for your beliefs: Innovation demands courage. We encourage open, respectful debates and take ownership of our commitments, ensuring that every decision aligns with our larger vision.
• Together we scale: Growth is meaningful when it’s shared. We build with empathy, collaboration, and trust, knowing that real progress comes from working together towards a common goal.

Inc42: You operate in a complex regulatory environment, how have you built the capacity to adapt quickly to policy changes? What role do you see for collaboration with regulators in shaping the fintech ecosystem?

Ashish Singhal: At CoinSwitch and Lemonn, compliance has been a core principle from day one, ensuring that regulatory shifts do not translate into disruptions. Trust and transparency drive our approach. We have always maintained stringent KYC checks and a robust compliance framework to uphold industry standards.

Our dedicated compliance team navigates the evolving regulatory landscape, making sure we fully follow the VDA (virtual digital asset) regulations and SEBI’s framework for stock brokers. With internal governance, regular risk assessments, and proactive planning for different policy scenarios, we’re able to adapt quickly and smoothly to any changes.

We also believe that working closely with regulators is essential for building a responsible, innovation-friendly fintech ecosystem in India. For any fintech startup, it’s important to prioritise this partnership because we’re handling our users’ financial assets. Regulations are there to protect both users and platforms, and we’re committed to supporting and aligning with these frameworks to create a safer, more transparent financial environment for everyone.

Inc42: As you talk of regulations and compliance, what comes to mind is the shock that was triggered by the $230 Mn WazirX hack. Founders like you have stressed for more transparency with the users. But how do you ensure that at CoinSwitch?

Ashish Singhal: At CoinSwitch, transparency with our users has always been a top priority. That’s why we were the first in India to introduce regular Proof of Reserves (PoR) disclosures that are verified by a reputed third-party auditor as per standards prescribed by the Institute of Chartered Accountants of India.

With PoR, our users can easily verify that CoinSwitch maintains a 1:1 or higher holdings ratio. This means we securely hold assets equal to or more than the total crypto and INR balances of our users, ensuring that they can withdraw or redeem their funds anytime at ease.

But that’s not all. We have a host of other measures too to safeguard user assets. Let me give you a rundown.

• Enterprise grade custody: We work with the best custody providers to store crypto. Our custody providers insure assets in storage and in transfer.
• ISO/ IEC 27001:2022: CoinSwitch is ISO/IEC 27001:2022 certified, which highlights our dedication to implementing robust information security practices.
• Multi party computation (MPC): By eliminating a single point of compromise throughout the key lifecycle, MPC ensures a highly secure environment for storing, transferring, and issuing digital assets.
• Robust policy engine: We use robust policy engines that enable us to set up approval policies for transactions. This allows us to configure a list of rules that make transactions safer.
• Risk management: We follow strict fund management practices to minimise risks. The majority digital assets are stored in cold wallets. At any point, we have less than 5% of our assets on hot wallets and third-party exchanges. This allows us to work with multiple partners and minimise systemic risks.
• Customer support: We are here for you 24/7. If you face an issue with the CoinSwitch app or account, or if you require any other assistance, you can reach us @Csksupport.
• Financial strength: As you witnessed at the time of the alleged cyber attack, we made our users whole by using our own treasury. Our financial strength allows us to act in the interest of users and absorb external shocks to an extent. We have raised significant capital and are backed by some of the largest global investors.

Inc42: You talked of a customer-first mindset. What has been the most effective strategy to navigate investor expectations while aligning them with your vision? This also takes us to the lessons that other founders can learn from your journey…

Ashish Singhal: At PeepalCo, transparency and clarity in long-term vision have been the key to managing investor expectations.

We prioritise sustainable growth over quick wins, making sure our product innovations truly meet market needs. Honest, data-backed communication helps us build trust, and being adaptable allows us to handle any regulatory changes smoothly.

For anyone planning to start their own venture, one of the biggest lessons is to raise capital with a purpose, not merely out of an urgency. It’s important to have a vision in a general direction which can turn into large outcomes. When you focus on building a profitable, mission-driven business, you attract long-term partners and outsized outcomes.

Inc42: How would you have handled a WazirX kind of situation differently?

Ashish Singhal: Well, I firmly believe that a company’s first priority should always be to protect its users. This is an everyday exercise and doesn’t start after you’re hacked. In such situations, the affected company should absorb losses internally whenever possible, rather than shifting the burden onto their users.

You, as a company, absorb the impact. You go into the market, continue to innovate, and generate more revenue to recover from the losses.

However, if a company isn’t able to cover the full extent of the losses immediately, it should still take partial responsibility. Like managing part of the repayments from the company’s treasury, and the rest perhaps through shares in the company or future revenue streams.

In more severe situations, companies should explore options like finding a buyer or undergoing liquidation to minimise losses to users. While this process might take longer, it ensures that users receive at least the minimum of what they’re owed, plus potentially something extra.

Corporate accountability and user trust should be non-negotiable. Protecting customers’ interests should always be at the heart of any recovery strategy.

[Edited By Kumar Chatterjee]