Coinbase, a renowned US-based cryptocurrency exchange, is preparing to re-enter the Indian market over two years after ceasing operations. The company is now working with Indian regulatory authorities to ensure compliance and ease the relaunch of its services.
Overcoming Past Challenges
Coinbase has faced regulatory challenges throughout its operation in India. In April 2022, the exchange aimed to simplify cryptocurrency transactions by integrating India’s Unified Payments Interface (UPI). However, the National Payments Corporation of India (NPCI) swiftly objected, claiming that Coinbase lacked the required authorization. This resulted in the service being abruptly suspended only days after its inception.
Coinbase faced increased governmental scrutiny by September 2023, causing it to close its operations in the country. The exchange encouraged Indian customers to withdraw their funds, thereby abandoning the market. Since then, India’s regulatory approach to overseas cryptocurrency exchanges has evolved, with some offshore companies getting approval after completing compliance standards.
Strategic Reentry Plans
Coinbase, determined to make a stronger comeback, is concentrating on compliance and strategic relationships. The company is seeking to register with India’s Financial Intelligence Unit (FIU), which is a necessary step before restarting operations. Coinbase representatives are set to meet with FIU authorities in March to clarify the registration process. The timing for approval is yet unknown, with the possibility of an extended review process.
To avoid past mistakes, Coinbase is hoping to work with experienced local crypto companies. These arrangements will allow for seamless UPI-linked transactions while adhering to Know Your Customer (KYC) and anti-money laundering rules. By enhancing its compliance structure, Coinbase hopes to compete with domestic platforms such as CoinDCX and CoinSwitch, which currently dominate the Indian industry.
India’s Cryptomarket Landscape
India is a lucrative yet challenging market for cryptocurrency exchanges. Despite legislative uncertainty, the country has one of the highest levels of cryptocurrency use globally. However, tight restrictions, such as a 30% tax on bitcoin transactions, present hurdles for market participants.
In reaction to these rules, industry groups such as the Bharat Web3 Association have lobbied authorities to allow UPI integration on cryptocurrency platforms. Their reasoning is based on the fact that registered organizations comply with the Prevention of Money Laundering Act (PMLA), which qualifies them for regulatory approval.
While it is unclear how Indian officials would react to Coinbase’s repeated efforts, the exchange looks to be taking a more systematic approach this time. Coinbase intends to reclaim its presence in India’s fast-growing crypto sector by focusing on compliance and local partnerships.
