Coinbase Seeks Return to India’s Crypto Market After Year-Long Halt Due to Regulatory Challenges

Coinbase’s Push to Re-enter India’s Crypto Market

After over a year of halting operations in India, Coinbase is actively pursuing a return to one of the world's largest crypto markets.

The American crypto exchange, which ceased operations in India in 2023, is currently engaging with Indian regulators to ensure it meets compliance requirements, aiming to relaunch its services in the country.

This move marks part of Coinbase’s broader strategy for global expansion, despite the challenges posed by India’s stringent crypto regulations.

Renewed Focus on Indian Market Amid Regulatory Landscape

The company is in talks with key Indian authorities, including the Financial Intelligence Unit (FIU), the agency tasked with monitoring financial transactions in the country.

According to sources familiar with the matter, the ongoing discussions are pivotal for Coinbase’s potential re-entry.

Coinbase has made it clear that it is committed to following local regulations.

A company spokesperson shared,

“We are excited about the opportunities in India and are committed to complying with local regulations.”

Binance Sets Precedent for Foreign Exchanges

Coinbase’s potential return follows the footsteps of its competitor, Binance, which resumed operations in India in August 2023 after resolving regulatory hurdles.

Binance’s successful re-entry established a significant precedent for other global crypto exchanges aiming to operate in India.

The crypto giant had faced similar regulatory concerns before it could obtain the necessary approvals to resume trading in the country.

Challenges in Coinbase’s Previous Attempt

Coinbase initially launched its services in India in April 2022, only to face immediate setbacks.

The exchange introduced support for India’s widely used United Payments Interface (UPI) system, but the service was halted within just three days.

India’s National Payments Corporation refused to acknowledge Coinbase’s operations, prompting a swift suspension.

The company later disclosed that informal pressure from the Reserve Bank of India had contributed to this abrupt stop.

Despite cryptocurrency trading not being illegal in India, many financial institutions refuse to engage with virtual asset firms due to the central bank's stance.

Policy Adjustments and Regulatory Uncertainty

While India has imposed a 30% tax on crypto income and a 1% tax on each transaction, the future of crypto in the country remains uncertain.

The government’s tax policies have made the market less attractive for investors, despite the growing adoption of digital assets.

In light of global policy shifts, India may yet adopt a more lenient approach to crypto regulation.

If Coinbase successfully navigates these regulatory hurdles, its return could offer more choices for Indian traders, potentially fostering greater adoption of cryptocurrencies.

Strengthening Ties with India’s Financial Sector

Coinbase’s interest in India also reflects a wider trend in U.S.-India relations, particularly in the financial sector.

Recently, Coinbase’s Chief Legal Officer, Paul Grewal, joined the U.S.-India Business Council (USIBC) board, signalling a stronger partnership between the two nations.

Grewal emphasised the importance of India’s growing web3 ecosystem, noting,

“India has one of the largest and fastest-growing web3 ecosystems in the world, with a booming developer community, pioneering startups, and bold institutional adoption.”

Competitive Market Landscape in India

India’s crypto market has become more competitive in recent years, particularly with the exit of WazirX, once a leading local exchange, following a significant loss of funds.

As a result, CoinSwitch and CoinDCX have emerged as the dominant players in the Indian market, with both platforms receiving backing from Coinbase.

If Coinbase can clear the necessary regulatory requirements, it could capitalise on this gap in the market, offering Indian traders an additional trusted platform.

Despite the regulatory uncertainties, big exchanges like Coinbase and Binance are still showing interest in India’s crypto market, hinting at its strong potential for both local and global investors.