Over a year after formally ceasing operations in the most populous country in the world, Coinbase is preparing to reenter the Indian market.
According to two people familiar with the situation who asked not to be named because discussions are private and still in progress, the American cryptocurrency exchange is interacting with a number of Indian authorities, including the Financial Intelligence Unit (FIU), an Indian government organization that examines financial transactions.
After a turbulent past in the South Asian market, Coinbase is working to make a comeback. After a seven-month regulatory pause, Binance, the biggest cryptocurrency exchange in the world, registered with the FIU and began operations in India last August. For international cryptocurrency exchanges looking to operate in India, the action set a precedent.
In 2022, Coinbase’s prior attempt to introduce services in India was abruptly terminated. In April of that year, the exchange made its highly anticipated debut by adding compatibility for the popular United Payments Interface (UPI) technology. Three days after Coinbase’s activities were denied recognition by India’s National Payments Corporation, which regulates UPI, the business was forced to discontinue the service.
Coinbase CEO Brian Armstrong subsequently revealed that the trade suspension was the result of “informal pressure” from the Reserve Bank of India. Many entrepreneurs, investors, and other officials claim that although while trading cryptocurrencies is allowed in India, lenders generally avoid doing business with virtual asset companies there in order to avoid upsetting the central bank.
How long it takes to obtain the required permits, like as a license to operate from the FIU, will determine when Coinbase may restart. Many exchanges, including Kraken and Binance, were previously found to be “illegally” functioning in India by the agency. (Since then, several of these companies have complied with the FIU, which mandates more extensive disclosures regarding user activity.)
According to Coinbase CFO Alesia Haas’ remarks at a recent Goldman Sachs conference, the cryptocurrency exchange is interested in India as it considers expanding internationally.
Coinbase’s chief legal officer, Paul Grewal, also joined the U.S.-India Business Council’s board of directors this week. The U.S. Chamber of Commerce is the organization’s parent organization.
“I’m honored to join the USIBC Board to help strengthen the bridge between India and the U.S. in shaping the future of finance,” he said in a statement shared by USIBC. “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. Since 2018, its share of global web3 developers has quadrupled to 12%, the highest growth among emerging markets.”
The local government imposed a 30% tax on cryptocurrency profits and a 1% deduction on each transaction in 2022, which contributed to the tiny size of the cryptocurrency business even though India is a major international market for American tech companies.
Reentering India could help bridge the gap created by the collapse of WazirX, an Indian exchange that lost around half of its reserves in a theft. The leading cryptocurrency exchanges in India right now are CoinSwitch and CoinDCX, both of which are supported by Coinbase.
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