Crisis-hit crypto exchanges fixing security gaps

- Crypto exchanges implementing several measures

- Multi-factor authentication

- Cold storage for digital assets

- Regular security audits

Mumbai: After the FTX fiasco in the US, crypto exchanges in India are resorting to a host of measures in their bid to regain the confidence of their users. For example, they are planning to focus on the security of funds.

It may be mentioned here that FTX, the Bahamas-based crypto exchange, collapsed and filed Chapter 11 bankruptcy proceedings in the US in November this year. At its peak, FTX was the world's third largest crypto exchange in the world. In the light of the FTX crisis, crypto exchanges in India have initiated various steps to build trust with their users after the bankruptcy of FTX or other similar events.

First, they are enhancing security measures. Crypto exchanges will be implementing stronger security measures to protect user accounts and prevent cyber attacks or other forms of theft or fraud. This includes measures such as multi-factor authentication, cold storage for digital assets, and regular security audits.

Further, these exchanges are increasing transparency around their operations and financial health to build trust with their users. This could include measures such as disclosing information about their management team, business model, and financial performance.

Besides, they are improving their customer support services to address user concerns and queries in a timely and effective manner. They are initiating measures such as providing more robust online resources, expanding customer service hours, or offering more personalised support.

Overall, building trust with users will obviously require crypto exchanges to take a multifaceted approach that addresses a variety of concerns and addresses the unique needs of their users.

Talking to Bizz Buzz, Amanjot Malhotra, Country Head of Bitay, said: "In the light of the recent events that have affected the crypto ecosystem, companies/exchanges will have to dedicate a lot of efforts to rebuild trust and gain investor confidence. It isn't just going to be about the scale or popularity of the company. Instead users would seek more transparency and a secure infrastructure."

First and foremost, addressing users concerns should be the focus. For this, there should be a fully functional communication channel which is available for users to reach out to in case of any concern or blockage while trading.

Rajagopal Menon, vice-president, crypto exchange WazirX, says: "Our support team is reachable through social media, email, etc., for any grievance, questions or doubts that users might have while engaging with crypto which is a relatively new asset class for many investors in India."

KYC check is another way where crypto companies can onboard authentic users and provide a record in case of any external inquiry (from regulators). In our case, we have a multi-step user identification process in place for onboarding users. Here, we ensure that the user identity is protected and not compromised in any way, he added.

In addition to the stringent KYC verification rules and processes, regular AML checks, third party audits to identify suspicious transactions, etc., are being done on a regular basis by exchanges dealing with cryptocurrencies. WazirX has partnered with TRM labs to continuously monitor transactions and ensure that there is no leakage anywhere.

WazirX has been actively engaging with its consumers through different channels such as Telegram, Twitter and other social channels and blogs to provide them assurance amidst all uncertainties. "We have clarified time and again that we do not use the funds of our users as leverage and stand against the same. Our users own their funds and we are the custodians, keeping the assets safe," said Menon.

Proof of reserves is another way in which Indian exchanges are providing a complete picture of how assets have been stored on the platform, industry insiders say.

In light of the recent events that have affected the crypto ecosystem, companies/exchanges will have to dedicate a lot of efforts to rebuild trust and gain investor confidence. It isn't just going to be about the scale or popularity of the company. Instead users would seek more transparency and a secure infrastructure for engagement

- Amanjot Malhotra, Country Head of Bitay