 to enhance security and investor confidence following recent security breaches. The CIPF will be funded entirely by CoinDCX, with 2% of the exchange's annual brokerage income allocated to the fund.){kind=link}
Sumit Gupta, the Co-Founder of CoinDCX, announced the launch of a Rs.50 crore ($6 million) Crypto Investor Protection Fund (CIPF) through an X(Twitter) post today. This move is aimed at bolstering investor confidence and ensuring the security of assets on the platform, following recent high-profile security breaches in the cryptocurrency sector.
The announcement follows a $230 million hack at WazirX that occurred not too long ago, during which almost 45% of user money kept in a single wallet was exposed. The event raised concerns in the Indian cryptocurrency ecosystem and made exchange security procedures more closely watched.
In response, Gupta, a strong opponent of WazirX’s management of the matter, emphasised in his statement the significance of improved security protocols and investor protection.
INR $6 Million Crypto Investor Protection Fund for Holding Trust
Gupta emphasised the need to foster long-term trust in the Indian cryptocurrency industry in his announcement. Although CoinDCX has an industry-leading security infrastructure and processes, the CIPF is intended to provide an extra layer of protection for customer assets. By providing compensation in the unlikely event of a platform security breach, the fund seeks to give investors a piece of mind.
Gupta guaranteed that CoinDCX would provide all funding for the CIPF, with the exchange allocating 2% of its yearly brokerage income to the fund. This strategy guarantees that the fund will expand and change over time, with recurring evaluations to ascertain whether fund size increases are required. Crucially, customers won’t be asked to contribute to the fund in any way.
The fund does not include losses from regular trading activity or market fluctuations; rather, it is intended to cover losses resulting from security breaches or other unfavourable events. CoinDCX has increased security by spreading its assets among several vaults and custody providers, decreasing the likelihood of a big breach.
Is $6 Million Enough for Users’ Trust?
Gupta clarified that the initial $6 million fund is only a starting point and is intended to increase over time. Because assets are stored in a variety of vaults and with several custodians, there is less chance of a significant breach. The fund offers protection similar to that of international cryptocurrency exchanges because its structure complies with international norms.
The establishment of the CIPF by CoinDCX marks a significant step towards enhancing investor confidence in the Indian crypto market. Initiatives such as the CIPF play a critical role in fostering confidence and guaranteeing the industry’s long-term sustainability since security continues to be a primary issue for cryptocurrency investors.
With the CIPF in place, CoinDCX hopes to establish a standard for security and investor protection in the Indian cryptocurrency market by leading by example.
Regulators and the cryptocurrency community will be keenly observing the fund’s continuous development and dedication to transparency, which might have an impact on similar projects throughout the industry.