Lessons from building a startup in the crypto world

I’ve spent close to a decade building a crypto exchange that allows retail investors to gain exposure to digital assets. In this journey of making crypto more accessible to Indian investors, I learnt lessons that I didn’t quite come across in my previous stints in other sectors. And this is when I realised that building a startup in the crypto ecosystem is very different from building a startup in any other industry.

Today, with more than 1,200 startups and Indians making up over 12% of the global Web3 workforce, the country is now known as one of the fastest-growing markets for digital assets, and an appetite for crypto exposure is shown by millions of retail investors despite regulatory uncertainty.

According to Chainanalysis reports, India has consistently been ranking at the top in crypto adoption for the past 3 years. Behind these numbers, hard choices were made, unique challenges were addressed, and important learnings were gained that can guide future entrepreneurs in the space.

Building trust in a distrustful industry

Every startup founder talks about the importance of trust. But in crypto, the success of a product or service is determined by the level of trust established. Unlike ecommerce or fintech, where existing regulatory protections are provided to users, crypto is operated in a space where guardrails are still evolving.

Retail investors in India more often than not enter the crypto markets with scepticism and doubt regarding scams, volatility, etc. According to Chainalysis, over $24 billion worth of crypto was moved through illicit addresses between 2017 and 2023. In such an environment, you are building trust more than just a product.

We needed to invest heavily in compliance, KYC, and transparency long before regulations made them mandatory. Lessons like this are unique to crypto. This is one of the only spaces where you’re building an ecosystem of trust in a market where doubt is the first layer.

Regulatory flux as a constant

Most startups have to deal with some regulatory complexity. But in crypto, it’s a moving target. In India alone, crypto had to take the tough path with temporary bans, reversals by the Supreme Court, and tax laws. At one point, exchanges saw a 90% drop in volumes in India after the 1% TDS on transactions was introduced in 2022.

For a crypto entrepreneur, business models had to be designed to survive such policy shocks. Instead of having a short-term outlook, we needed to build resilience as a strategy, making sustainable revenue streams, diversifying product portfolio, and scenarios where regulations could tighten overnight were prepared for.

The key lesson is that, in crypto, it is not enough for regulations to be merely adjusted to; systems must be built ahead of regulatory mandates to ensure a smooth functioning of a startup.

Liquidity is survival

Startups are often taught that growth is king. In crypto exchanges, liquidity is king. Without sufficient trading volumes and order book depth, even the best-designed product collapses. Unlike a SaaS startup, which can grow linearly, crypto platforms are faced with a paradox: users cannot be attracted without liquidity, and liquidity cannot be built without users.

We needed to come up with incentive-driven programmes, market maker partnerships, and community-driven engagement became crucial. We learnt to balance these incentives carefully because artificial liquidity can collapse as fast as it grows.

This experience taught me something beyond crypto: in network-driven businesses, liquidity (or its equivalent) is not a milestone—it’s the lifeline.

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Education as a growth lever

A large part of India’s population skipped the phase of investing in traditional assets like mutual funds or bonds and entered crypto directly. However, this leap led to a knowledge gap, creating both risk and opportunity. On one hand, uninformed investors caused volatility and panic selling. On the other hand, the doors opened for startups to differentiate themselves through user education. It was found that transparent communication, explainers, and financial literacy initiatives were essential for user acquisition and retention.

Global market, local realities

Crypto is designed to be borderless, but crypto startups are not built in the same way.  In India, strong retail participation was created by a young population and a mobile-first economy, but day-trading activity was limited by high taxation. In the US, institutional participation is seen as dominant, while Dubai has been positioned as a regulatory hub.

The insight is that scaling in crypto must be done with a “glocal” strategy where local realities need to be understood deeply while global trends are followed. Unlike Web2 startups' playbooks that can often be copied across markets, hyper-adaptation is required in crypto.

Closing thoughts

Building a startup is always hard. Building one in crypto is exponentially harder because the rules are constantly changing, scepticism is baked in, and the volatility isn’t just financial—it’s existential. But it also offers lessons that few other sectors can teach.

From trust being built as a core product, to liquidity being treated as survival, to regulation being seen as a moving target, different ways of thinking are forced upon participants in the crypto world. And perhaps the biggest takeaway is that if resilience can be built here, resilience can be built anywhere.

(Edul Patel is the CEO of Mudrex.)