Trust is key to crypto exchange sustainability — CoinDCX CEO

Investor sentiment has always been a critical driver in the crypto space. Both positive and negative sentiment influence ongoing trends — be they price movements, product launches or regulations. In 2022, sentiment worldwide suffered as major crypto firms and ecosystems collapsed, further straining investors amid an unforgiving bear market.

While many showed resilience as Terraform Labs, Celsius and Voyager, among others, closed down, Sam Bankman-Fried’s alleged misappropriation of FTX customers’ funds drove even the most die-hard crypto investors to question the integrity of those running the show.

A series of scams, crashes, bankruptcy filings and court cases have forced investors to rethink how they store crypto and seek accountability from crypto exchanges. Proof of reserves (PoR) became the de facto standard adopted widely among crypto exchanges to publicly showcase and reassure investors that funds exist.

Sumit Gupta, co-founder and CEO of CoinDCX — a Mumbai-based crypto exchange — has opted for the same approach of being transparent with investors. Speaking to Cointelegraph, Gupta discussed the thought process behind proof-of-reserves standards, healing investor sentiment, a new era of trust-building and more.

Cointelegraph: While many exchanges have opted to reveal their proof of reserves, the outflow of assets from exchanges remains a growing trend. Do you think this new standard will help regain investors’ trust?

Sumit Gupta: The collapse of FTX, which is actually a case of malpractice and manipulation of the market, has shaken the industry. Unfortunately, the fiasco has been linked to the integrity of the crypto market, questioning the safety and security of crypto assets.

It is imperative for users to worry about their funds being secured on exchanges, and it is the duty of the crypto industry to give users confidence about the safety of their funds in a transparent manner. PoR is one of many steps to assure users that their funds are safe. Therefore, CoinDCX, in the pursuit of complete transparency, published a full proof of reserves with an audited report furnishing both sides of its reserve balance — i.e., assets and liabilities.

Building trust in any ecosystem is an ongoing process that requires continuous attention and effort. While PoR is one step in this direction, the other steps to regain users’ trust include ring-fencing digital trading assets, such as websites, apps and trading platforms. Couple this with a robust…