CoinDCX, a leading cryptocurrency exchange in India, has launched a $6 million Crypto Investors Protection Fund (CIPF) to safeguard its users against potential security breaches.
The move by CoinDCX follows the recent cyber theft at WazirX, another major crypto exchange. The hack, which took place last month, led to the loss of $230 million, or 45 percent of the platform’s crypto asset holdings.
CoinDCX’s investor protection fund aims to offer a safety net for investors, bolstering their confidence in the platform’s security. The initial corpus of $6 million for the CIPF comes directly from CoinDCX’s cash reserves.
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CoinDCX May Increase Funds Contributed to CIPF
Sumit Gupta, co-founder of CoinDCX, said in an interview with Business Standard that the company will contribute 2% of their income to the fund. “We have used our own balance sheet and reserves to establish this fund. Additionally, we will contribute 2% of our brokerage income to this fund on a monthly basis, ensuring its growth over time,” Gupta said.
The company plans to reassess the brokerage contribution rate annually to ensure the fund remains robust. “Each year, we will evaluate whether to increase the 2% rate or adjust the brokerage contribution to maintain the fund’s efficacy,” Gupta added.
1/ 🚨 Important Update! INR 50 Crore Crypto Investors Protection Fund (CIPF)@CoinDCX has been operating for over 6 years, and we are grateful for all the trust and support we have received from customers that have helped us grow and push India’s crypto and Web3 ecosystem… pic.twitter.com/LBPCuM5onM
— Sumit Gupta (CoinDCX) (@smtgpt) August 7, 2024
CoinDCX’s CIPF sets a precedent in the Indian crypto market, being one of the first exchanges to introduce such a customer compensation fund. “This initiative is dedicated solely to protecting customer funds,” Gupta noted. “It provides a sense of security to our investors, reassuring them that the company will compensate for losses in case of security breaches or other adverse events.”
However, the fund will not cover losses resulting from individual investors’ lapses, such as password leaks. This distinction underscores the importance of personal security measures alongside platform security.
The establishment of the CIPF comes as the WazirX hack has heightened concerns among crypto investors about the safety of their assets on Indian exchanges.
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India To Unveil Crypto Policy By September
The Indian government is gearing up to release a discussion paper outlining its policy direction on digital assets before September.
“The policy stance is how does one consult relevant stakeholders, so it is to come out in the open and say here is a discussion paper these are the issues and then stakeholders will give their views,” Economic Affairs Secretary Ajay Seth said in a recent interview.
Meanwhile, India continues to grapple with rigid crypto tax rules. As reported, Finance Minister Nirmala Sitharaman has upheld the controversial crypto tax regulations during the announcement of the fiscal year 2024-2025 budget.
Despite extensive lobbying from the cryptocurrency industry, which presented substantial evidence to advocate for a reduction in the tax-deducted-at-source (TDS) policy from 1% to 0.01%, the existing rules remain unchanged.
The cryptocurrency sector had also requested the government to introduce progressive taxes on gains instead of the existing flat 30% rate and to allow losses to offset gains.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
