In the last couple of years, encouraged by Bitcoin’s soaring popularity in the Indian market, a number of cryptocurrency exchanges have come up with many more queued up to be launched. However, very few cryptocurrency startups have actually managed to raise funding. Homegrown Mumbai-based Koinex is one of the few that has. It is also a living example of VCs’ growing fondness for investments in Indian cryptocurrency and blockchain startups.
Founded by Rakesh Yadav, Rahul Raj, and Aditya Naik in August 2017, Koinex, in a very short span — just five months from its launch — successfully closed a pre-Series A round of funding led by Dirk van Quaquebeke, Managing Partner of Beenext, a well-known Singapore-based early-stage venture capital (VC) firm, and Daniel Morehead, founder and CEO of Pantera Capital, the world’s largest blockchain-focused VC firm.
To assuage the effect of the RBI circular — which banned banks and payments companies from extending any kind of services to cryptocurrency exchanges — for its users, Koinex came up with an innovative collateralised peer-to-peer (P2P) crypto transactional solution called Loop. The platform enables users to carry out crypto investments and enables crypto-INR trading notwithstanding the RBI circular.
But the circular has had a far-reaching impact on the cryptocurrency market of India. Inc42 speaks to Koinex founder and CEO Rahul Raj to find out just how deep and wide the impact has been. We also speak to him about the company’s journey in the last one year — the year which saw Bitcoin prices surge to above $19,000 and then stabilise at $ 6,500 — and seek to understand the Loop advantage.
Here are some excerpts from the interview:
Inc42: The last one year has been a roller coaster ride for the cryptocurrency segment across the world. How has the year been for Koinex? To what agents and factors do you attribute your phenomenal success?
Rahul Raj: It has been an incredible 12 months for us as we end the year with a cumulative transaction volume of over $7.1 Bn (INR 50K Cr). Being one of the first digital assets exchange in India, we quickly gained the trust of Indian investors with our superior product offering and user-centric approach. This was reflected in our January market stats as we received more than 35K sign-ups and crossed $246 Mn (INR 1,722 Cr) in trade volume within 24 hours.
We were the first exchange globally to launch a Ripple (XRP)-based trade market and, in India, we were the first exchange to introduce instant deposits and withdrawals. We gained a significant market share and built a strong reputation as a trusted exchange and succeeded in securing funding from Pantera and Beenext as well as accomplished angel investors.
One of the main reasons why Koinex grew to become the most trusted digital assets exchange in a short span of time is our ‘consumer-centricity’. Product development never stops at Koinex; we are constantly looking at ways to better the user experience by enhancing the efficiency of the platform, improving the robust security offering, and providing ‘value-added features’ on our platform to help in easier and smarter trading. The other reason is that we’ve been very agile in adapting to the market conditions.
Inc42: How did the RBI circular affect Koinex in terms of revenue, users, etc?
Rahul Raj: The RBI directive was a knee-jerk reaction from the government, which adversely impacted the entire industry and also the players in the space. The main concern for the Indian investors then was losing value of their digital assets and so we launched Loop, a collateralised P2P trading platform that allows crypto/INR trading. Loop is a trustful token transaction network that takes trading in digital assets to a more decentralised setup.
Inc42: What’s the scope of the P2P crypto transaction network in India. Tell us more about Loop and how has users’ response has been so far.
Rahul Raj: Loop is India’s first collateralised peer-to-peer trading platform that enables crypto/INR transactions at zero network and zero trade fees. We have equipped Loop with fundamentally critical features such as KYC compliance, multiple payment options, technology-enabled dispute settlement, and automated action calls via Interactive Voice Response (IVR).
Buyers and sellers on Loop can create their own listings (like a marketplace) or explore existing listings to choose their best trades. Other key aspects of Loop include a user rating mechanism, cancellation option for sellers, listing modification, dynamic pricing, cleansing of stale listings, and a host of other features to ensure only genuine and legitimate trading on the platform.
We are also building sophisticated algorithms to enhance the trust factor and discourage fraudulent trading activities. This platform is also fully integrated with the Koinex exchange to create a complete ecosystem where one account can be used to access crypto/crypto corridors on Koinex and crypto/INR trade on Loop, thus completing the trading cycle for users.
Zero trade fees and our user-focused approach has helped Loop become the most trusted platform among users for peer-to-peer trading. The other key reason for Loop’s success is our conscious effort to help active and genuine traders gain better traction on their trades and weed out the rest, which reduces the scope of disputes and builds a healthy and trusted trading platform. While it’s still early days, Loop has been very well received by the Indian trading community and we are seeing increasing traction every day.
Inc42: As the crypto market is currently dull, does Koinex have any plans to launch other blockchain-based solutions? Please elaborate.
Rahul Raj: We recently launched Loop and we’re also exploring many other blockchain use cases for various industries and sectors. We are open to collaborating with the government or industry players/category leaders to forge alliances and co-develop sophisticated solutions.
Since we successfully built an exchange from scratch, we already have a strong understanding about the financial sector and the various blockchains which are integrated in it, but that doesn’t limit us from exploring other sectors such as healthcare, education, governance, real estate, digital media, and so on.
We have a strong team of more than 60 members who specialise in this revolutionary technology. We aim to make India a hotbed for blockchain technology and Koinex was our first step towards this goal. We take pride that Koinex is built in India, built for India.