Cryptocurrency custodian BitGo will provide its services to Indian exchange CoinDCX, offering secure storage and partial insurance for assets traded on the platform.
BitGo — a United States-based firm that claims to process over 20% of all Bitcoin (BTC) transactions — provides an insurance policy covering up to $100 million in value through a syndicate of Insurers in the Lloyd’s of London and European Marketplace.
CoinDCX apparently already began transferring its assets to BitGo’s wallets last week.
With BitGo Custody, all cryptocurrencies on CoinDCX will be secured in omnibus and segregated hot and cold wallets with two-factor authentication for all accounts.
A fraction of funds traded on the CoinDCX exchange will be protected by BitGo’s $100 million insurance policy, including user assets held on CoinDCX’s lending service, DCXLend, and cold assets and funds.
In a statement, Pete Najarian, chief revenue officer at BitGo, noted that “with the recent uptick in trading volumes on Indian exchanges, the need of the hour is for professionalization in the form of fund security in the crypto market.”
BitGo already provides custody services to multiple crypto exchanges including Bitstamp and LGO Markets. This February, it established two separate crypto custodies in Switzerland and Germany and launched an institutional-level crypto lending service in March.
BitGo has also onboarded commercial insurance broker Woodruff-Sawyer & Co (in partnership with Paragon Brokers) to enable clients to insure their assets more flexibly and purchase an excess limit beyond its $100 million policy.
The current climate for crypto in India
Earlier this year, India’s Supreme Court overturned a longstanding ban on banks’ services to crypto-related firms, promising to usher in a more positive climate for the domestic industry.
In an interview with CryptoNewspeople, CoinDCX co-founder and CEO Sumit Gupta pointed to the recent influx of foreign investments into the cryptocurrency industry, noting that the exchange had secured investments from Polychain Capital, Bain Capital Ventures, and BitMEX operator HDR Global Trading.
“The recent Facebook-Jio deal also signals that global conglomerates are starting to turn towards India as a potential hub to launch crypto-related projects,” Gupta said.
In the aftermath of the positive Supreme Court ruling, well-known trading platforms such as WazirX witnessed a month-on-month growth of over 80% in both March and April.
Gupta noted that CoinDCX has seen 47% growth in trading volumes in the first quarter of 2020, a 10 fold growth in user signups and a 150% growth in daily active users,
However, even after the ban on banks’ dealings with crypto businesses was overruled, some banks were reported to be continuing to deny their services in support of the sale or purchase of crypto assets.
Gupta told CryptoNewspeople that:
“Despite the Supreme Court’s ruling, regulation of the cryptocurrency sector within India remains vague—with limited clarity as to what frameworks are likely to emerge in relation to emerging technologies. This has led to a degree of continued hesitancy for traditional actors to engage with actors within the cryptocurrency and digital asset space.’
Several exchanges have also been prompted to collectively pen a letter to the country’s central bank to request more clarity as to whether their operations are subject to the country’s Goods and Services Tax, or GST.
Gupta has previously told CryptoNewspeople that the exchange is working hard to obtain a favorable verdict on the matter.