Coinbase is making strides toward reestablishing its presence in India, more than a year after it halted operations in the country, which holds the title of the world’s most populous nation.
The American cryptocurrency exchange is in discussions with multiple Indian authorities, including the Financial Intelligence Unit (FIU), a government agency focused on monitoring financial transactions. This information comes from two sources familiar with the situation who prefer to remain anonymous as negotiations progress and are confidential.
Coinbase’s efforts to re-enter the Indian market come after a challenging period in South Asia. In August, Binance, the largest cryptocurrency exchange globally, resumed its operations in India after registering with the FIU, overcoming a seven-month regulatory pause. This move has set a benchmark for other foreign crypto exchanges looking to operate in India.
Coinbase’s initial attempt to launch in India ended prematurely in 2022. The exchange celebrated its debut in April of that year by incorporating the popular United Payments Interface (UPI). However, it was forced to halt services just three days later when the National Payments Corporation of India, the body that governs UPI, declined to acknowledge Coinbase’s activities.
Brian Armstrong, the CEO of Coinbase, later revealed that the company experienced “informal pressure” from the Reserve Bank of India, which prompted the cessation of trading. Although cryptocurrency transactions are not illegal in India, many financial institutions refrain from partnering with virtual asset firms to avoid triggering issues with the central bank, as reported by various entrepreneurs, investors, and officials.
The timeline for Coinbase’s potential re-entry hinges on the duration required to secure the necessary approvals, including a license from the FIU. The agency had previously determined that several exchanges, such as Kraken and Binance, were operating “illegally” in India, although many have now complied with the FIU’s demands for more extensive user activity disclosures.
“Coinbase is enthusiastic about the prospects within the Indian market and aims to adhere to all regulatory requirements,” a spokesperson for the company stated in an interview with TechCrunch, while refraining from providing updates regarding the FIU registration process.
The interest in re-entering India aligns with Coinbase’s broader international expansion strategy, as outlined by CFO Alesia Haas during a recent conference hosted by Goldman Sachs.
While India is considered a vital overseas market for American tech companies, the cryptocurrency sector remains relatively small. This is partly due to the government’s introduction of a 30% tax on crypto gains and a 1% tax deduction on each transaction back in 2022.
Re-establishing operations in India could allow Coinbase to fill the gap left by the recent downfall of the Indian exchange WazirX, which reportedly lost approximately half of its reserves in a security breach. Currently, CoinSwitch and CoinDCX top the list of Indian crypto exchanges, both of which have the backing of Coinbase.
Compiled by Techarena.au.
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