CoinDCX’s Mridul Guptas tips for crypto investors
What has been the effect of TDS on trading volume at CoinDCX?
On the investor side, there is very little impact, because most of them are long-term owners. So when they buy, there is no TDS implication. When it comes to traders, they definitely adjust their portfolios and positions. But we have not yet realized the full effect of TDS. Maybe, three weeks after implementation, we would have a better understanding of the impact.
The threshold for applicability of TDS provisions is ₹10,000 or ₹50,000 for specified persons. How do you ensure that these regulations are complied with?
We deduct TDS from the first transaction. The challenge is that in crypto, each exchange is different, and there is no common ground among them. It is not possible for us to know if you performed transactions more or less than the threshold. So, in order to comply with the guidelines, we have basically started charging TDS on all transactions.
1% TDS is quite challenging for traders, and especially for exchanges. Do you intend to take legal action to challenge it?
No, there is no legal recourse per se. We must sit down with the government and the political think tanks and iron this out. How 1% TDS damages the ecosystem is that because of this there will be less use of crypto, fewer companies will be formed in the crypto and web3 area, and there will be fewer jobs. It is important for decision makers to understand these points and design the regulation and tax legislation accordingly.
Are users allowed to remove crypto and rupees on your platform?
In fact, most of the users on our platform do not make crypto transfers. Their primary form of taking in and taking out funds is in the rupee form. This number can be as high as 98-99%. So INR money transfer remains available to all our users. On the crypto transfers, we have disabled it for retail users.
When it comes to cryptocurrencies, because we are an exchange, for certain people, who help us build liquidity, it is important for us to enable cryptocurrencies. For them, we have some controls in place, based on the qualification. So cryptocurrencies remain open to people who give us liquidity, but for most people on the stock exchange it remains disabled.
Some crypto platforms have gone insolvent globally. How is CoinDCX positioned?
Every company that is in pure lending and risk management business meets the heat. When you think of CoinDCX, the business model is very different. We are dependent on transaction revenues. So we make money by charging a small fee for buying and selling. This capital is kept in cold custody and is not used on risky protocols, at all.
If CoinDCX becomes insolvent for any reason, can creditors seize customers’ crypto and money?
They can not. We have ensured the correct terms, guidelines and standard operating procedures to ensure that the crypto belongs to the customers and not the shareholders or creditors. In addition, the crypto is not kept on our balance sheet.
What was the nature of the recent messages to krypton sites from ED?
They wanted to understand certain trade flows. The market is so new that most people in the think tank and in the authorities do not understand how the order is executed. And this was the context of the conversation we had with ED. The main purpose of ED was to understand how cryptocurrencies work and how transaction flows take place from one state to another. And we have been able to provide them with this information satisfactorily.
Have you implemented any cost-saving measures?
We have implemented zero cost-cutting measures, as we are in a phase of hyperbuilding. We have enough capital to last for the next four to five years, even though we have zero income. We are actually hiring more people and building more systems to ensure that when the market goes up again, people will return to CoinDCX. We are close to 560 people now, and are in line to meet our estimates of having 1,000 employees by the end of the year.
Last year, millions of investors entered the crypto market, but they are now at a loss. What do you want to say to them?
I would recommend people to think about putting in small quantities with a frequent time interval so that they do not have to think about the timing of the market. The second piece of advice I would give is to use some of the smart tools available on the platform such as stop loss or limit order, etc, which enable them to act smart. And number three, which is probably the most important piece of advice, is that this is the time to really learn about the types of cryptocurrencies that exist and that will sustain the test of time and grow over a long period of time.
