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CoinDCX OTC Business Plan Mar-25
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What’s our progress on institutional business?
Origin: Sell DMA to mid-frequency systematic (API) hedge funds and trading firms
Currently: Selling DMA of OKX, Bybit and Binance to HFT, Market Makers, Quant Desks
Proposition to Indian HFT Firms:
Business in numbers:
Revenue:
What’s our insight?
What’s OTC Business?
Over-The-Counter (OTC) trading is essentially a "private trading service" for large clients. Unlike regular exchange trading where orders are placed on a public order book, OTC trading happens directly between two parties with the exchange (CoinDCX) acting as the intermediary.
Why institutions need OTC business?
Who are the clients of OTC business?
How big is the OTC business?
Why now?
Sources: The Block Research, Chainalysis Market Intelligence, Galaxy Digital Research
Galaxy VisionTrack as of Dec-23
Coinbase's overall institutional transaction revenue for 2024 was $345.6 million, which includes revenue from institutional clients. Please note, this doesn’t include custodian fee.
Who are we competing against?
Competitors
Players
Est. 2024 Revenue
Geographical Focus
Strengths
Weaknesses
Monthly Trading Volume
FalconX
$200-250M
Primary: US
Secondary: Europe, expanding in Asia
Full-suite institutional platform combining trading, credit, and clearing
Strong technological focus with advanced API capabilities
Institutional-grade pricing and execution
Significant funding ($450M+ raised) and $8B+ valuation
Relatively newer entrant compared to some competitors
Less established in derivatives compared to spot
Limited physical presence in Asia
$13-15B
Coinbase Prime
$345M
Primary: US, Europe
Secondary: Asia, Middle East
Deep liquidity from connection to Coinbase exchange
Comprehensive institutional offering (trading, custody, staking)
Strong brand recognition and regulatory standing
Full prime brokerage services
Higher fees compared to some competitors
Sometimes perceived as less flexible than crypto-native desks
Public company pressures affecting risk appetite
$20-25B
Galaxy Digital
$150-180M (trading division)
Primary: North America
Secondary: Europe
Full-service digital asset financial firm
Strong traditional finance connections
Comprehensive offering including investment banking
Research capabilities
Trading is only one part of diverse business
Institutional organizational structure can slow innovation
Less technology-focused than some competitors
$8-10B
Cumberland DRW
$250-300M
Primary: US, Europe
Secondary: Asia
One of the oldest and most established crypto OTC desks
Backed by traditional trading powerhouse DRW
Deep liquidity and market making expertise
Strong relationships with large institutions
Less technology-forward than newer competitors
More selective with client relationships
Limited public information on operations
$18-22B
Wintermute
$120-150M (OTC division)
Primary: Europe
Secondary: Global
Strong market making capabilities
Algorithmic trading expertise
Well-regarded for liquidity in altcoins
Agile and innovative approach
Smaller institutional client service team
Primarily focused on market making
Less comprehensive institutional services
$7-9B
B2C2
$180-220M
Primary: Europe, Asia
Secondary: North America
One of the oldest crypto OTC desks
Acquired by SBI Holdings, providing strong financial backing
Excellent reputation for quote quality and execution
Strong in APAC markets via SBI
Less developed in derivatives compared to spot
More selective with client onboarding
Less comprehensive than full-suite competitors
$12-15B
There are no rows in this table
Why CoinDCX?
What’s the product?
We don’t have off-the-shelf product available to service these institutions
At CoinDCX, we will own the client relationships and source pricing through a partner quant desk. The partner quant desk handles trade execution, while CoinDCX manages servicing, margin settlements, and risk
Top features from Product
Pre-Trade - Onboarding, Trade Inquiry, Request for Quote (RFQ)
Trade - Quote to Order Placement, Custom Order Placements
Post-Trade - Portfolio, Orders and Trades History, Settlements
Glimpse of the Product
What’s the GTM?
Insights
GTM
Name
Geographical Focus
Target Segment
Channels
Phase 1 (1-6M)
APAC Countries - with Singapore License
UAE + ME - with BitOasis
Crypto-native Hedge Funds and Trading firms
Venture Capitalists
Crypto Foundations
Ex-Sales Professionals
Referral
Events
Phase 2 (6-12M)
US and EU Offshore
Crypto-native Hedge Funds and Trading firms
Capitalists
Crypto Foundations
Ex-Sales Professionals
Custodial Partnerships
Events
Phase 3 (12-18M)
US Onshore
Banks
Family Offices
Asset Managers
Ex-Sales Professionals
Partnerships
Events
Phase 4 (18-24M)
US and EU Onshore
Banks
Corporate Treasury
Ex-Sales Professionals
Referral
Events
There are no rows in this table
Where can we go from here? 12-month projections
I analyzed Jan-Aug 2024 data for Aplo
Revenue per client varies a lot and is market dependent and given they achieved this in their 4th year of operations
Starting Assumptions
Key Assumptions
Yearly Targets
Revenue Projections
Quarter
Year
Actual
Required Clients
Trading Volume (USD)
Revenue (USD)
Volume per Client
Revenue per Client
Market Factor
Factor
Trading Volume Refactored
Revenue
Yearly Revenue
Q1-Y1 (imagine Sep-25)
Y1
Dec-25
0
$0
$0
$0
$0
Bear
0.8
$0
$0
$400,000
Q2-Y1
Y1
Mar-26
3
$10,000,000
$50,000
$3,333,333
$16,667
Bear
0.8
$8,000,000
$40,000
Q3-Y1
Y1
Jun-26
6
$35,000,000
$150,000
$5,833,333
$25,000
Bear
0.8
$28,000,000
$120,000
Q4-Y1
Y1
Sep-26
8
$75,000,000
$300,000
$9,375,000
$37,500
Bear
0.8
$60,000,000
$240,000
Q1-Y2
Y2
Dec-26
10
$125,000,000
$500,000
$12,500,000
$50,000
Bear
0.8
$100,000,000
$400,000
$3,440,000
Q2-Y2
Y2
Mar-27
14
$200,000,000
$800,000
$14,285,714
$57,143
Bear
0.8
$160,000,000
$640,000
Q3-Y2
Y2
Jun-27
20
$300,000,000
$1,200,000
$15,000,000
$60,000
Bear
0.8
$240,000,000
$960,000
Q4-Y2
Y2
Sep-27
30
$450,000,000
$1,800,000
$15,000,000
$60,000
Bear
0.8
$360,000,000
$1,440,000
Q1-Y3
Y3
Dec-27
42
$625,000,000
$2,500,000
$14,880,952
$59,524
Bear
0.8
$500,000,000
$2,000,000
$18,680,000
Q2-Y3
Y3
Mar-28
57
$850,000,000
$3,400,000
$14,912,281
$59,649
Bull
1.2
$1,020,000,000
$4,080,000
Q3-Y3
Y3
Jun-28
75
$1,125,000,000
$4,500,000
$15,000,000
$60,000
Bull
1.2
$1,350,000,000
$5,400,000
Q4-Y3
Y3
Sep-28
100
$1,500,000,000
$6,000,000
$15,000,000
$60,000
Bull
1.2
$1,800,000,000
$7,200,000
Q1-Y4
Y4
Dec-28
125
$1,875,000,000
$7,500,000
$15,000,000
$60,000
Bull
1.2
$2,250,000,000
$9,000,000
$54,300,000
Q2-Y4
Y4
Mar-29
150
$2,250,000,000
$9,000,000
$15,000,000
$60,000
Bull
1.5
$3,375,000,000
$13,500,000
Q3-Y4
Y4
Jun-29
180
$2,700,000,000
$10,800,000
$15,000,000
$60,000
Bull
1.5
$4,050,000,000
$16,200,000
Q4-Y4
Y4
Sep-29
217
$3,250,000,000
$13,000,000
$14,977,880
$59,908
Bull
1.2
$3,900,000,000
$15,600,000
Q1-Y5
Y5
Dec-29
259
$3,875,000,000
$15,500,000
$14,961,776
$59,846
Bull
1.2
$4,650,000,000
$18,600,000
$77,000,000
Q2-Y5
Y5
Mar-30
300
$4,500,000,000
$18,000,000
$15,000,000
$60,000
Bull
1.2
$5,400,000,000
$21,600,000
Q3-Y5
Y5
Jun-30
350
$5,250,000,000
$21,000,000
$15,000,000
$60,000
Bear
0.8
$4,200,000,000
$16,800,000
Q4-Y5
Y5
Apr-30
417
$6,250,000,000
$25,000,000
$14,988,010
$59,952
Bear
0.8
$5,000,000,000
$20,000,000
There are no rows in this table
Annual Summary
Year
EOY Clients
Annual Volume
Annual Revenue
Client Growth
Year 1
5
$96,000,000
$400,000
+5
Year 2
30
$860,000,000
$3,440,000
+25
Year 3
100
$4,670,000,000
$18,680,000
+70
Year 4
217
$13,575,000,000
$54,300,000
+117
Year 5
417
$19,250,000,000
$77,000,000
+200
There are no rows in this table
What resources will we need from CoinDCX?
Team Strength
Role
Q1-Y1
Q2-Y1
Q3-Y1
Q4-Y1
Responsibilities
Head of OTC
1
1
1
1
Overall business leadership, strategy, key client relationships
Sales/Relationship Managers
0
1
1
1
Client acquisition, relationship management
Sales Traders
0
0
1
1
Trade execution, market making, pricing
Risk Manager
0
1
1
1
Credit assessment, position monitoring
Technology Lead
1
1
1
1
Trading platform development
Developers
2
2
2
2
Platform building, API development
Operations Specialist
0
1
1
1
Client onboarding, settlement
Compliance Officer
0
0
0
1
KYC/AML processes, regulatory compliance
Total Headcount
4
7
8
9
There are no rows in this table
Year 1 Summary
Total Year 1 Personnel Cost: $406,250
This represents the base salary costs only. Below costs are excluded from the compensation costs.
Devil's Advocate Interrogation
On Late Market Entry: You're entering a mature OTC market where the major players have 5-8 years of established relationships, proven infrastructure, and battle-tested risk management. Why would institutions trust a newcomer when they already have relationships with Cumberland, B2C2, and FalconX? What compelling reason exists for them to add another counterparty?
To fasten the growth, we’ve to convert clients who are already with some other OTC desks rather than going to new comers. The ways we can achieve this -
On Regional Advantage: You're positioning APAC focus as an advantage, but B2C2 through SBI already has strong APAC presence, and all major players have satellite offices in Singapore and Hong Kong. What regional advantage do you actually have that others can't simply match by expanding their existing operations?
Good question. B2C2 is natively an European Desk while it’s parent company SBI Financials is a Japanese firm.
The way I look at it is: Most firms have their satellite offices in Asia and that limits their focus on going down deeper in this market.
We can provide more coverage in terms of service timings with dedicated accounts manager. Acquire licenses quickly to build better regional presence
In terms of GTM, we leverage diversity by building familiarity with local audience by shipping brand content in regional languages and regional financial TV Channels and offering specialized regional market intelligence reports.
We can also think of creating custom liquidity solutions for regional currency pairs. This is tricky and compliance-intensive.
On Talent Acquisition: Your plan assumes hiring experienced sales professionals who can bring 1-2 clients per month. If these professionals exist, why aren't they already working for your competitors? And if you poach them, aren't you paying a premium that will further compress already thin margins? How will you afford the $180-250K base salaries plus bonuses when you have no established revenue?
The only proven ways to acquire talent
On Technology Differentiation: Every competitor claims to have superior technology and execution. FalconX has raised over $450M largely for technology development. Wintermute and B2C2 are known for algorithmic excellence. What specific technical innovations are you bringing that they haven't already built or couldn't quickly replicate?
We partner with a quant desk which optimizes even for that 1ms of latency. Their tick to trade latency is way under few microseconds. This can be achieved with use of sophisticated algorithms and choosing low-latency stack and optimizing for every bit of network latency.
While quant desk is optimizing for their latencies, we at CoinDCX also make sure our clients’ order details reach to partner quant desk as fast as possible while we also write our code and infra in C++. Everyone has to have that mindset of lowering down the latencies right from Day 1.
On Client Acquisition Timeline: Your model assumes 29 institutional clients within 9 months post-launch. Most institutional sales cycles are 3-6 months from first contact to first trade. How will you compress this timeline when institutions are notoriously cautious about adding new counterparties, especially without a proven track record?
We need to build trust faster, the only way to do that is hire top professionals from competitors which bring their trusted network on CoinDCX quickly.
Second, we need to service them gently at every touch point so as to make client special which builds further trust and triggers referral channel quickly
On Regulatory Challenges: You're assuming licensing in month 5 of operations, but Singapore and Hong Kong crypto licensing processes have taken 12+ months for some applicants. What happens to your model if licensing takes twice as long as projected?
The fastest way to acquire licenses in these two regions is acquire good lawyers who are well connected to regulators in the region. Second, answer regulators’ queries as fast as possible to avoid any time delay at our end. Second way, find targets which are looking for acquisitions or renting out their licenses for some dollars. This is tricky but can expedite the process.
On Capital Requirements: Operating an OTC desk requires substantial capital for margin requirements, maintaining spreads during volatility, and covering settlement risk. Your competitors have raised hundreds of millions in capital. How will you compete with sufficient capital to offer competitive pricing and manage risk during market stress?
CoinDCX has also raised $250Mn in funding and has monthly revenue of $10Mn. That should give us enough cushioning in using the margins and taking the risks.
On Profitability Timeline: With high fixed costs (experienced traders, sales personnel, technology, compliance), how long is your runway to profitability? Your competitors achieved scale during the 2020-2021 bull market when spreads were wider and institutions were desperate for liquidity. In today's compressed margin environment, how will you achieve profitability before exhausting your capital?
Not relevant for CoinDCX. We’re not eyeing the profitability with this venture. If cashflows continue to fund the operations, we’ll be able to grow sustainably. While CoinDCX continues to fund the operations from its other cashflows.
On Market Share Ambitions: You're targeting 14.65% of your defined TAM, which is extraordinarily ambitious for a new entrant in a relationship-driven business. What is your realistic path to this market share when existing players have entrenched relationships and are fiercely competitive?
Yes, that’s aggressive hence we’ll spend slightly over our budget to ramp up the sales funnel. We should have captured 5-10% of Tier-2 markets by 12 months of operations.
We can also take “Lighthouse Client” strategy which focuses on closing 2-3 marquee clients in period of 7-8 months. These clients can potentially contribute 80% of revenues in 12 months time period.
We choose our niche clearly rather than spreading out. May be just hedge funds (client-type) based out of HK or Singapore (region). High risk high reward strategy.
On Value Proposition: Ultimately, what is your unique value proposition that will compel institutions to choose CoinDCX over established competitors who already offer competitive pricing, deep liquidity, and comprehensive services?
Execution Quality on spot and derivatives instruments
Choosing niche clearly after iterating faster
Better Servicing
Building Brand Trust Faster
Hiring top-notch Sales Talent
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