CoinDCX weighs listing plan, but can it really float an IPO?

Even as the Narendra Modi government gets ready to introduce a bill in parliament that could potentially ban private cryptocurrencies, India’s first cryptocurrency unicorn says it is getting ready for an initial public offering (IPO).

Neeraj Khandelwal, the co-founder of CoinDCX, one of India’s three largest crypto exchanges, has said that the platform could be looking for a listing as soon as government regulations allow it.

The share sale would be a big vote of confidence for India’s digital asset industry similar to Coinbase Global Inc.’s US listing earlier this year, Khandelwal said in an interview with Bloomberg Television on Monday.

How realistic is CoinDCX’s IPO plan, given that the government could actually ban cryptocurrencies?

In one word, unrealistic, especially if the government does go ahead and bring a legislation to ban cryptocurrencies. If that happens, exchanges like CoinDCX will effectively have to shut themselves, at least to India-based customers.

To be sure, they could move their operations outside the country. However, that may be easier said than done as most big markets, which can offer them the sort of scale that India does, already have several exchanges that cater to their customers.

Even if India does not impose an outright ban, and allows some cryptos to be traded as assets, it could be problematic for these exchanges, as they do not have a regulator and no specific rules governing them.

Wasn’t cryptocurrency trading banned in India earlier?

Yes, it was. The Reserve Bank of India had banned cryptocurrency trading in 2018. However, the Supreme Court lifted the ban last year. This turned the fortunes of cryptocurrency exchanges around, leading to a rush of users investing in digital currencies and deep-pocketed institutional investors backing such platforms.

Why does Khandelwal want to go in for an IPO?

“An IPO gives a legitimacy to the industry, just like the Coinbase IPO gave a lot of confidence in the crypto markets. Similarly, we want to instil a similar level of confidence with an IPO of CoinDCX,” he said, making his case for a listing.

By when does CoinDCX plan to come out with its listing?

The firm will decide on a “precise timeline" depending on incoming government regulations, Khandelwal said. “We certainly will look at that in order to grow the industry further," he said.

How much money has CoinDCX raised so far?

CoinDCX raised Rs 670 crore ($90 million) in August this year from investors led by Facebook Inc. co-founder Eduardo Saverin’s B Capital Group. The funding round valued the firm at $1.1 billion, it said at the time.

Other investors who took part in the round were Coinbase, Polychain and Jump Capital. This round made CoinDCX the first crypto exchange in India to enter the unicorn club of tech startups with a valuation of at least $1 billion.

Last year, CoinDCX had raised Rs 100 crore in a round led by blockchain software company Block.one.

CoinDCX isn’t the only crypto platform in India to pocket big cheques. In October, CoinSwitch Kuber raised $260 million from a bunch of investors including Coinbase Ventures, Andreessen Horowitz, Sequoia Capital, Ribbit Capital and Tiger Global. The round valued CoinSwitch at $1.91 billion. This made it the second Indian crypto exchange to become a tech unicorn, and the most valued.