India’s largest cryptocurrency exchange, CoinDCX, has announced the establishment of the Crypto Investors Protection Fund (CIPF) to compensate users for losses resulting from security breaches or other adverse events. With an initial allocation of ₹50 crore, CoinDCX plans to grow the fund over time, according to Sumit Gupta, co-founder of CoinDCX.
“Given the current events, we want to ensure customers continue to have long-term trust in the ecosystem. Internationally, some larger exchanges have set aside funds like this, but this is a first-of-its-kind among Indian crypto exchanges,” Gupta explained. He added, “We don’t expect anything to happen from a security point of view because of our strong posture as an organisation. But in case of any adverse events or breaches, this fund will ensure CoinDCX customers’ assets remain protected.”
The organisation intends to contribute 2% of its brokerage income to the corpus, with plans to increase the fund’s size over time. “We have used our own reserves and balance sheet to carve out this fund. 100% of the fund is in-house and free for all CoinDCX customers. In case of any security breach, we will use capital from this fund to compensate users so they don’t lose out. It is the company’s responsibility to ensure customer assets are protected,” Gupta said.
In addition to security breaches, the fund will also cover errors on the organisation’s end. However, individual negligence by users will not be compensated. “The company cannot be held liable in cases like these, but in case of issues because of the platform or losses to the customers, we will look at deploying this fund,” Gupta clarified.
CoinDCX’s initiative to create a protection fund sets a precedent in the Indian cryptocurrency market, aiming to bolster investor confidence amid increasing concerns about security in the digital asset space. The move reflects a growing trend among major exchanges worldwide to establish safety nets for their users, ensuring that customer trust and market stability are maintained.
As the Indian cryptocurrency market continues to evolve, CoinDCX’s proactive approach may inspire other exchanges to adopt similar measures, contributing to a more secure and resilient ecosystem for investors. The CIPF represents a significant step forward in protecting investors and fostering long-term growth in the digital asset sector.
