Coinbase, the leading US-based cryptocurrency exchange, is actively pursuing a comeback in the Indian market following its pause in operations in 2022 due to regulatory impediments.
Engaging with Indian authorities, including the Financial Intelligence Unit (FIU), Coinbase is diligently seeking approvals and ensuring adherence to local regulations.
Coinbase Contemplates Reentry into Indian Market
With a grand entrance in April 2022, Coinbase introduced support for India's widely utilized United Payments Interface (UPI). Unfortunately, shortly after the launch, the National Payments Corporation of India (NPCI) halted Coinbase's operations, creating a suspension of services amid regulatory concerns.
India's rigorous tax regulations have long been a worry for participants in the crypto market, with a 30% tax on crypto earnings and a 1% transaction charge dissuading retail investors and limiting market fluidity.
Several foreign exchanges, such as Binance and Kraken, encountered regulatory scrutiny in India, leading to accusations of illegal operations. Nonetheless, some firms, including Binance, have since complied with FIU directives and recommenced their services.
For Coinbase, the current strategy involves proactive engagement with Indian regulators to ensure alignment with regulations. However, the launch timeline depends on securing an FIU license and other essential approvals, potentially ushering in major liquidity upon approval.
Analyst Kyle Chassé remarked, "Huge liquidity could flow in from this."
Following this news, Coinbase's stock, COIN, witnessed a surge, trading at $274.80 at the time of report.
Navigating India's regulatory landscape is not a novel experience for Coinbase. Previously, in late 2023, the exchange adjusted its services during the G20 Summit, indicating an adaptability to evolving regulations.
This time around, Coinbase appears to be adopting a more cautious approach by ensuring regulatory compliance prior to recommencing its services.
"...last time they got rekt by regulators. If they haven't leveled up, it's just another liquidity trap," highlighted a Twitter user.
India's Crypto Market and Potential Implications of Coinbase's Return
Coinbase's interest in India aligns with its broader global expansion plans. The recent appointment of its chief legal officer, Paul Grewal, to the US-India Business Council (USIBC) Global Board of Directors signifies the company's strategic efforts to reinforce Indo-US ties in fintech and digital assets.
"I'm honored to join the USIBC Board to help strengthen the bridge between India and the US in shaping the future of finance," stated the USIBC, citing Grewal.
Despite the regulatory hurdles, India stands as a key center for blockchain and cryptocurrency innovation, witnessing increased adoption of Web3 and active participation from developers and startups.
While the local crypto trading market faces obstacles due to regulatory uncertainties and high tax burdens, Coinbase's potential return could revitalize India's crypto space, especially post the WazirX collapse that saw a significant loss of reserves.
Presently, CoinSwitch and CoinDCX dominate the Indian market, supported by Coinbase. A successful reentry by Coinbase could introduce healthy competition and provide Indian traders with a robust platform.
"This move could impact the crypto market and reshape competition among local exchanges," emphasized a user on X.