CrossTower became the second international crypto exchange to enter the Indian market last week, following Binance’s acquisition of WazirX in 2019.
Despite regulatory uncertainty in the country, CrossTower, a US-based crypto exchange focused on the capital market, has entered India. After Binance acquired WazirX in 2019, CrossTower is the second international exchange to enter the Indian market.
CrossTower CEO and co-founder Kapil Rathi told Forkast.News that the exchange has already hired 35 employees in India at its Gurugram office and plans to hire at least a hundred more in the next six to nine months. CrossTower, which was founded in 2019, was launched in the middle of last year and currently operates exchanges in the United States and Bermuda, in addition to India.
CrossTower has grown 200 percent to 300 percent quarter over quarter since its launch last year, with institutional investors with assets under management totaling more than US$80 billion among its major customers. “We have a lot of large hedge funds and large institutions trading on CrossTower,” Rathi explained.
According to him, operating in India will allow the company to service customers around the clock and capture the Asian market.
Taking over the Indian market
The Indian crypto market is still in its infancy — Indian crypto exchange CoinSwitch Kuber, which claims to be the country’s largest crypto exchange with over 10 million users, has yet to capture even 1% of India’s 1.3 billion people. Despite the small number of users, there are already a few exchanges in the market, such as WazirX, CoinDCX, which became a unicorn last month, and Unocoin, to name a few.
Rathi believes that CrossTower’s team distinguishes the exchange from its competitors. Rathi has over two decades of Wall Street experience and has helped build SEC-regulated exchanges, while his co-founder Kristin Boggiano is a regulatory expert and the founder of the Digital Asset Regulatory & Legal Alliance, a blockchain and crypto regulation think tank.
Furthermore, Rathi claims that CrossTower provides better liquidity than its peers in the Indian market — a strength the exchange is banking on in order to establish itself as a major player in India.
However, CrossTower does not intend to compete with other Indian exchanges, but rather to work with them to expand the asset class in the country.
“In cricket terms, we are literally in the first inning in India [when it comes to crypto]. “This is literally the end of the opening,” Rathi said. And, he added, the current and incumbent exchanges, as well as additional international exchanges that enter India, will contribute to the growth of digital assets in the country.
“We’re not talking about competition here. I’m actually looking forward to working with the WazirX, CoinDCX, and Zebpay teams, and seeing how we can all collaborate to shape and educate regulators,” Rathi said. “We are not in competition. We’re here to help grow this asset class, which has the potential to help the country grow.”
Furthermore, with an average age of 29, India has the world’s youngest population, with over 600 million internet users and 190 million unbanked people — a market large enough for everyone. “When it comes to the global crypto space, I believe India is an interesting jurisdiction. The regulatory environment is still uncertain, but I believe India has enormous potential,” Rathi said.
Blockchain technology and cryptocurrencies are “basically designed to bring financial freedom and equality to the masses.” It is a technology that is not under the control of the government. It is a technology that does not necessitate the use of banks as intermediaries. According to Rathi, “the potential of this technology is actually designed for a country like India,” which has the second-largest unbanked population after China.
Is this a calculated move or a high-risk gamble?
For years, the Indian government has been debating crypto regulation, but nothing concrete has emerged. The market has been bombarded with contradictory messages from the government, which has spoken of a blanket ban while also advocating for a softer regulatory approach. However, the central bank has always stood firm and lobbied for a ban on cryptocurrencies, particularly for payment purposes.
According to the most recent update on crypto regulation, the government is considering classifying cryptocurrencies as commodities in the asset class. The crypto bill is currently awaiting Union Cabinet approval before being introduced in parliament.
However, the specifics of what the bill entails and how cryptocurrencies might be taxed or traded are unknown. This has thrown the Indian crypto community into disarray. However, it has not dampened investor and business enthusiasm, as evidenced by CrossTower’s entry into India and the robust growth in user numbers reported by exchanges.
Despite the lack of regulatory clarity, Rathi believes CrossTower’s move is not risky. Rathi is confident that the Indian government will not impose prohibitive regulations to stifle crypto. “I wouldn’t call it dangerous. I am more than confident that the Indian government understands the power of [blockchain and cryptocurrency] technology. We are not a country known for stifling innovation. “There is no such thing as history,” Rathi stated.
“I’m actually looking forward to having a much more healthy conversation around regulation rather than thinking it’s a risk,” he said, adding that the team’s strong regulatory background gives it a strategic advantage and level of comfort discussing regulation with governments.
Indeed, Rathi boasts that the company strictly adheres to regulations, earning it the AA ranking from crypto-asset data provider CryptoCompare in its Exchange Benchmark last month. The benchmark ranks the industry’s lowest risk global spot exchanges. CrossTower came in fourth place, trailing Coinbase, Gemini, and Kraken.
“At CrossTower, regulatory compliance comes first. So I am actually looking forward to having a framework in India because, unfortunately, uncertainty is keeping investors on the sidelines right now,” Rathi said. Since its inception in India, the exchange has fielded inquiries about the legal status of Bitcoin and other cryptocurrencies in the country, which Rathi attributes to a lack of awareness and a lack of regulation. Nonetheless, the market appears to be improving as more people adopt cryptocurrencies and foreign firms and venture capital enter the country.