Ribbit Capital, the Palo Alto-based backer of Revolut, Robinhood and Affirm, has led its first Indian cryptocurrency deal.
CoinSwitch Kuber, one of India’s crypto investing platforms, landed a $15 million Series A led by Ribbit Capital. The investor also backs non-crypto Indian firms such as CRED, Razorpay, and Zest.
San Francisco-based Paradigm co-led the round alongside Ribbit Capital. Founded by Coinbase’s co-creator, Fred Ehrsam, and Matt Huang, a former Sequoia partner, Paradigm is a crypto-focused investor.
The two backers are investing in CoinSwitch Kuber ahead of a year which sees the start-up gun for a user base of ten million.
The fintech, founded in 2017, says it will put the new capital towards its technology, security, compliance and new product capabilities.
Existing investors participating in the round include Sequoia Capital India. As well as angel investor, Kunal Shah, who founded credit card and bill payments management platform CRED.
Evolution of CoinSwitch Kuber
The start-up began as CoinSwitch in 2017, a global aggregator of crypto exchanges. It removed the need for businesses to create an account on an exchange.
Then in June 2020, co-founders Ashish Singhal, Govind Soni and Vimal Sagar Tiwari, launched CoinSwitch Kuber. Singhal, Soni, and Tiwari are college friends, and ex-employees of Amazon, Microsoft and Zynga.
The Kuber platform launch was designed to simplify crypto investments for Indian retail investors.
Within six months of launch, the fintech claimed this platform had attracted more than one million users. It had also reaped the rewards of some $270 million in investments.
Planning to times its user base by ten in just a year is bold. But it speaks to the popularity of such platforms in India – home to the world’s largest population at 1.36 billion.
“We aim to double down on the Indian market and are targeting a ten times growth in our user base by the end of the year,” says CEO Singhal.
“To this end, we will invest in product and technology and also run a slew of awareness initiatives to educate investors about the potential of crypto as an emerging asset class.”
Crypto growth in India
CoinSwitch Kuber isn’t the only crypto platform in India to land funding recently. Crypto-based lending platform Vauld landed $2 million in December. The same month, CoinDCX landed $13.9 million.
“Since the lockdown began in 2020, volume of crypto trading in India grew drastically,” Monark Modi, Bitex Technologies founder and CEO, told Financial Express earlier this month.
“By the end of December 2020, $60-65 million worth of Bitcoin trades were happening in the Indian region on an average, every day.”
Pre-COVID-19, users possessed Bitcoins and altcoins, but few conducted actual trades with them. “Since March 2020, when there was a global boom, there was a 12% jump in the number of trades that took place in India,” Modi explained.
Paradigm’s Huang and Arjun Balaji agree. “While the crypto landscape in India remains nascent, it has been an exciting past 12 months and over time we believe India could be one of the largest global crypto markets,” they say.
The global crypto boom has seen Bitcoin reach highs of $41,000, but value of the coin has continued to fluctuate. It sits at around $34,000 currently, which is still a notable improvement on its December low of around $18,000.
Working with regulators
In October, India’s crypto exchange BuyUcoin led the publication of a draft which proposes a regulatory sandbox for crypto businesses across the country.
The draft focuses on demands for a taxation framework around cryptocurrencies. The Reserve Bank of India (RBI) is expected to levy an 18% goods and services tax (GST) on crypto trades.
“Government mulling a tax structure is a sign of better understanding of this novel asset class and we are hopeful that this would lead to more positive news going forward,” Sumit Gupta, CEO of CoinDCX, told CoinDesk in December.
“Regarding the tax rate, and structure is something that we’ll wait and watch, but this is definitely a positive sign.”
With volumes of such trades only climbing, it’s unsurprising that the government has spied another revenue channel in it.
Crypto firms like BuyUcoin suggest in the October draft that crypto traders and investors should declare their yearly crypto income under a separate provision to the Income Tax Act.
The calls for more regulatory clarity around crypto follow a Supreme Court ruling in March which overturned restrictions imposed by RBI on banks and crypto firms.
The central bank introduced these restrictions back in April 2018. They had prevented all entities – mainly banks – regulated by the central bank from dealing in virtual currencies.
It had also prevented them from providing services to facilitate any person or entity dealing or settling in them. It had seen a number of crypto firms in India shutter, but now, with regulation on their side, these firms – as well as a host of new ones – are enjoying a second wind.