CrossTower, a US-based crypto exchange focused on the capital market, has entered India despite regulatory uncertainty in the country. CrossTower is the second international exchange to enter the Indian market after Binance acquired WazirX in 2019.
The exchange has already hired 35 employees in India at its Gurugram office and aims to hire at least a hundred more in the next six to nine months, CrossTower CEO and co-founder Kapil Rathi told Forkast.News. Founded in 2019, CrossTower was launched in the middle of last year and currently operates exchanges in the U.S. and Bermuda, apart from India.
Since its launch last year, CrossTower has grown 200%-300% quarter over quarter, with institutional investors having assets under management of over US$80 billion as its major customers. “We have a lot of large hedge funds, lots of large institutions actually trading on CrossTower,” Rathi said.
Operating in India will give the company the capability to service customers round the clock and capture the Asian market, he said.
Capturing the Indian market
The Indian crypto market is still in its nascent stages — Indian crypto exchange CoinSwitch Kuber, which claims to be the largest crypto exchange in the country with over 10 million users, is yet to capture even 1% of India’s 1.3 billion population. But despite the low number of users, there are already a handful of exchanges in the market including WazirX, CoinDCX, which became a unicorn last month, and Unocoin, to name a few.
Rathi believes it is CrossTower’s team that sets the exchange apart from its competitors. Rathi has worked for over two decades on Wall Street and helped build SEC-regulated exchanges while his co-founder Kristin Boggiano is a regulatory expert who also founded the Digital Asset Regulatory & Legal Alliance, a blockchain and crypto regulation think tank.
Moreover, Rathi claims CrossTower offers better liquidity than its peers in the Indian market — a strength the exchange is counting on for establishing itself as a prominent player in India.
But CrossTower is not looking to cross swords with other Indian exchanges, but rather collaborate with them to grow the asset class in the country.
“We are literally in the first inning in India [when it comes to crypto] in cricket terms. This is literally the opening over,” Rathi said. And the current and incumbent exchanges, as well as more international exchanges that enter India, will contribute to the growth of digital assets in the country, he added.
“So we’re not talking about competition. I’m actually really looking forward to working with the team at WazirX, CoinDCX, Zebpay, and seeing how we all can collaborate and help shape and educate regulators,” Rathi said. “We’re not competing. We’re here to help grow this asset class, where we can actually help grow the country.”
Besides, with an average age of 29, India has the youngest population in the world with over 600 million internet users and 190 million unbanked people — a big enough market for everyone. “I think India is actually an interesting jurisdiction when it comes to the global crypto space. The regulatory environment is still uncertain, but I think the potential in India is huge,” Rathi said.
Blockchain technology and cryptocurrencies are “essentially designed for bringing financial freedom, financial equality to the masses. It’s a technology that’s not controlled by the government. It’s a technology that doesn’t require banks as intermediaries. The potential of this technology is actually designed for a country like India,” which has the second-largest unbanked population after China, Rathi said.
A strategic move or a risky bet?
The Indian government has been mulling crypto regulation for years but nothing concrete has emerged as yet. The market has been inundated with mixed messages from the government, sometimes speaking of a blanket ban while sometimes leaning toward a softer approach to regulation. But the central bank has always held its ground and lobbied for a ban on cryptocurrencies, especially for payments.
The latest update on crypto regulation suggests the government is looking to classify cryptocurrencies as commodities in the asset class. The crypto bill is currently awaiting approval from the Union Cabinet, after which it will be introduced in parliament.
However, the details of what the bill constitutes and how cryptocurrencies could be taxed or traded remains unclear. This has left the Indian crypto community in a sea of uncertainty. But it has not, by any means, lowered the enthusiasm and interest of investors and businesses, as indicated by CrossTower’s entry into India and the robust growth in user numbers reported by exchanges.
Despite the lack of regulatory clarity, Rathi does not consider CrossTower’s move a risky one. Rathi is confident the Indian government will not bring in prohibitory regulation to quash crypto. “I wouldn’t call it risky. I think I am more than 100 percent optimistic that the Indian government has understood the power of the [blockchain and cryptocurrency] technology. We’re not a country known to squash technology. There is no such history,” Rathi said.
“I’m actually looking forward to having a much more healthy conversation around regulation rather than thinking it’s a risk” to move to India, he said, adding the team’s strong background in regulation gives it a strategic advantage and comfort level discussing regulation with governments.
In fact, Rathi boasts that the company follows regulation strictly, which earned it the AA ranking from crypto-asset data provider CryptoCompare in its Exchange Benchmark last month. The benchmark ranks the lowest risk global spot exchanges in the industry. CrossTower ranked fourth, after Coinbase, Gemini and Kraken.
“It’s a regulatory compliance first culture at CrossTower. So I actually am really looking forward to having a framework in India because right now the uncertainty, unfortunately, is keeping investors on the sidelines,” Rathi said. Since its launch in India, the exchange has encountered questions about the legal status of Bitcoin and other cryptocurrencies in the country, which Rathi believes is due to lack of awareness and the absence of regulation. Nevertheless, the market seems to be picking up as more and more people adopt cryptocurrencies and foreign companies and venture capital enter the country.