Why did we invest in Descrypt?
Descrypt looks to create a comprehensive ecosystem of crypto investors by providing them a sophisticated platform to track their crypto transactions and file tax reports easily as well as efficiently.
Descrypt raised $1 million in April 2022 from global investors such as Global Founders Fund, and multiple other institutions. They also received investments from renowned members of the community like Pankaj Gupta (Head, Coinbase), Nischal Shetty (Founder, WazirX), and Aniket Jindal (Founder, Biconomy).
The following reasons compelled us to invest in the company.
- Increasing Regulatory Push for Web 3 Globally
Bitcoin launched in 2009 and changed the world. It strengthened the idea of a digital economy that was free of undue influence by any party. While it took till 2011 for the currency to gain a tangible value, the decentralised philosophy that it propagated started garnering popularity fairly quickly. In February of 2011, Bitcoin reached the price of $1 and by June of the same year it had already experienced its first bubble.
Today, Bitcoin is worth a massive $25,000 in a market which has also been introduced to other solutions in the vein like Etherium, Matic, etc. While the history of the cryptocurrency market in general has been rife with significant fluctuations, investor interest has been a constant across the board. The total market capitalisation of cryptocurrencies globally is above $1 trillion threshold.
As the quotient of people involved in the ecosystem has grown, so has the need for a more comprehensive regulatory environment. The collapses of statesmen companies like FTX and Celsius have only elaborated on the need for more clarity across the landscape.
The Biden administration in the United States signed an executive order in March 2022 that called on federal regulators to assess the broad risks and benefits offered by cryptocurrencies. In January 2023, it also released a roadmap to mitigate crypto risks, which encouraged regulators to “ramp up enforcement” and for Congress to “expand regulators’ powers.”
Other major countries like the UK, Brazil, Germany, and Canada have also been pushing to adopt more regulations and more rigid taxation structures to manage the industry more effectively. The Indian market, which has the 2nd biggest user base for cryptocurrencies across the world has levied a 30% tax on all profits generated.
As the global crypto ecosystem evolves and embraces new regulations and taxation frameworks, there is need for a platform that can help people comply with these evolving needs.
2) A Market Plagued by Information Asymmetry
While the web 3 market is indeed vast, it is not bereft of challenges that threaten the longevity of the ecosystem. The foremost amongst these is the massive information asymmetry that exists across the entire landscape.
In a market that is as sensationalised as web 3, it isn’t particularly hard to find information and insights. However, the sheer quantum of such information makes sifting through it to find clarity a daunting process for even the most seasoned of investors. Considering how turbulent the market can be, this chasm can have a massive adverse effect for retail investors.
As per a 2021 report from Cardify, one in three cryptocurrency investors have little to no information on what they are investing in, and only 16.9% of investors who have bought cryptocurrency “fully understand” the value and potential of cryptocurrencies. This is a key factor for why nearly 75% of Bitcoin investors lost money between 2015 and 2022 as per a study from the Bank of International Settlements. Moreover, emergence of more on-chain and off-chain solutions and an increasing complexity in DeFi and CeFi products exacerbates the problem.
While the retail investor enthusiasm is indeed a pleasant news for the market, they also tend to face a lot more issues in tracking transactions which makes it harder to generate a consolidated P&L report and comply with regulations in a market quickly moving towards robust regulation. This makes filing taxation considerably more difficult.
Therefore, the market needs a platform that can empower retail investors by offering a more transparent mechanism to keep track of their transactions and meet their taxation woes seamlessly.
3) A Team of Seasoned Veterans
Understanding this need within the web 3 market, Raghuram Trikutam, Arun Jadhav, and Abhishek Uppala founded Descrypt in 2022.
Building such a solution not just requires an extreme lucidity from the founders, but also immense technical know-how. A key reason for not just the genesis of Descrypt, but its hitherto success has been the founding team and their grit.
Raghuram is an IIT Guwahati alumnus who has amassed great professional pedigree across his career. He had been involved in senior positions for engineering teams across eminent companies like redBus, Flipkart, Freecharge, Grab, and Google. He is renowned across the ecosystem for his technological mastery and precision of thought. He has also been a retail investor for several years.
Arun, an IIT Bombay alumnus, adds to the engineering expertise of the team massively. He has honed his capabilities across his tenures at companies like Amazon, Freecharge, HackRank, Grab, Uber, and Zenequity. He has extensive experience in overseeing the tech department, product development, and engineering. His competency lies in using these capabilities for building delightful customer products.
Abhishek completes the team by adding an additional layer of know-how through his veritable set of experiences. An IcfaiTech alumnus, he had been a key leader for companies Yahoo, MindTree, Redbus, Goldman Sachs, Freecharge, Amazon, CRED, and Stripe. Across all of these, he had developed a sterling reputation for his technical understanding and diligence.
A product as complex has crypto tracking and tax reporting across on-chain and off-chain platforms requires a very technically sound team. Raghu, Arun, and Abhishek bring that to the table with clarity of thought process.
4) A Customer-centric Solution
Since the key issue at hand was helping the cryptocurrency retail investors navigate the often-treacherous waters of the markets, the devised solution had to be as accessible and personalised as possible. This philosophy is a key pillar behind what Descrypt looks to achieve.
Descrypt puts special emphasis in ensuring that its users don’t face any hurdles in compliance. To help their users with their taxation requirements, Descrypt allows its users to download P&L reports at extremely economical prices. They are working with ClearTax and Taxbuddy to assist in generating a comprehensive P&L report for their users and assist them more thoroughly with their taxation needs. To make the process easier for investors, Descrypt even allows them to import transactions by file upload and manual entry. Due to how accessible and how affordable Descrypt makes this feature, its offerings in taxation have been particularly lauded by its user base. The accuracy of transaction details brings comfort in their solution.
It has further developed a highly accessible portfolio management solution that tracks one’s investments comprehensively, accurately, and in real-time. They’ve also been able to undertake quite a few on-chain and off-chain integrations for the platform in a short time. This grants users much needed visibility into their investments in the most simplified form possible without compromising for accuracy. Further, it even shares relevant insights on the users’ portfolio choices to help them make more informed and pragmatic decisions with their investments.
Therefore, through its comprehensive set of offerings, Descrypt looks to create a vibrant ecosystem that is powered by more informed retail investors.
Conclusion
Since Bitcoin’s launch in 2009, the financial market has changed considerably. Due to the promise of a decentralised future that it introduced, cryptocurrencies have been able to garner a large user base not just globally, but also from India. However, with quite a few recent high-profile collapses within the ecosystem, the global clamour for regulations is increasing. This will also result in more stringent taxation requirements from the investors.
While the cryptocurrency markets have been vibrant for a while, they are not deprived of key challenges. The massive information asymmetry that exists in the market is at the forefront of these issues. Only 16.9% of investors understand cryptocurrency and its future. Considering that retail investors have been becoming more active in the markets, this poses a massive challenge to the landscape particularly as major countries begin moving towards a more regulated environment.
Raghuram, Arun, and Abhishek started Descrypt in 2022 to solve for accuracy of portfolio tracking and tax reporting. They combine their extensive industry experiences with impressive technical competencies, and precision of thinking to spearhead the company towards a bright future. This makes them an extremely impressive team in the ecosystem.
Descrypt looks to solve for the information asymmetry by making cryptocurrency investment as accessible and transparent as possible. They look to assist their users with compliance by allowing them to download P&L reports at very economical prices. They have also partnered with market leaders like CleartTax and Taxbuddy to offer their services in the most comprehensive manner possible to the users. To offer more clarity to their users, they’ve developed a simple solution that makes use of multiple on-chain and off-chain integrations to allow their users to manage their portfolio efficiently.
Therefore, through its unique set of offerings, Descrypt is making web 3 investments as easy as possible for the market. We wish them the best.
