After facing a rocky start and swift exit from India’s cryptocurrency market in 2022, Coinbase is making a calculated comeback to the world’s largest democracy. The U.S.-based cryptocurrency exchange has secured registration with India’s Financial Intelligence Unit (FIU), marking a significant turnaround from its previous venture that lasted mere days due to regulatory hurdles.
The company’s initial foray into India came to an abrupt halt when the National Payments Interface (UPI) support was suspended, followed by “informal pressure” from India’s central bank. However, the crypto landscape in India has evolved since then, with the government showing signs of reconsidering its stance on digital assets, influenced partly by U.S. crypto-friendly policies. The Reserve Bank of India’s previous 2018 crypto ban was lifted by the Supreme Court in March 2020, signaling a shift in regulatory perspective. Under the new regulatory framework, entities dealing in crypto-assets must submit transaction details to tax authorities within specified timelines.
India’s crypto journey evolves from regulatory resistance to cautious acceptance, as global influences reshape the government’s perspective on digital assets.
India’s crypto market presents a tantalizing opportunity, ranking first globally in grassroots adoption. The country has witnessed a remarkable surge in blockchain developers, growing from 3% in 2018 to 12% in 2023. Despite challenges like the 30% tax on trading profits and 1% TDS on transactions above ₹50,000, the market continues to attract both domestic and international players. Global regulatory frameworks have shown that clear compliance standards can significantly boost market confidence and institutional adoption.
Coinbase’s strategic re-entry, planned for 2025, comes at a time when India’s regulatory framework is showing signs of maturation. The appointment of Coinbase’s Chief Legal Officer to the U.S.-India Business Council has strengthened bilateral crypto relations, potentially paving the way for collaborative regulatory frameworks.
The exchange faces competition from established players like CoinDCX and Binance, the latter recently fined ₹188.2 million for PMLA violations. However, Coinbase’s focus on compliance and its plans to offer additional investment products could help it carve out a significant market share in India’s growing crypto ecosystem.
As India balances innovation with financial stability concerns, Coinbase’s return symbolizes a broader shift in the country’s approach to cryptocurrency regulation. With the government’s increasing openness to international crypto standards and a tech-savvy population enthusiastic to explore digital assets, the stage is set for what could be a transformative chapter in India’s cryptocurrency narrative.
