- Coinbase is re-engaging with Indian authorities including the FIU for approval to restart operations.
- India’s crypto stance is evolving, influenced by global regulatory changes and market demand.
Major crypto exchange Coinbase now plans to re-enter the Indian crypto market after more than a year of exit from the country. The second largest crypto exchange now engages with the FIU to restart its operations as it aims to comply with regulatory principles.
When Coinbase first entered India in April 2022, expectations were high. The U.S.-based exchange integrated India’s widely used Unified Payments Interface (UPI), signaling a seamless experience for traders. The plan was halted when The National Payments Corporation of India (NPCI), the body overseeing UPI, issued a public statement to deny Coinbase’s operations.
Brian Armstrong, Coinbase’s CEO, later explained that the Reserve Bank of India (RBI) used “informal pressure” to block its services. “We had to pull back,” Armstrong admitted in an earnings call.
Following the collapse of the exchange just three days after it launched, Coinbase was forced to halt trading, withdraw from the market, and eventually cut off Indian users by September 2023.
The drawback wasn’t a loss for Coinbase alone but an exposure to India’s uncertain regulatory policy. Despite not imposing a full ban, Indian authorities made it uneasy for major exchanges to operate freely.
What Has Changed and Why Coinbase is Optimistic
So why is Coinbase attempting a comeback? Drawing back to a similar issue faced by Binance and finding its way back. After the Financial Intelligence Unit (FIU) cracked down on offshore exchanges, Binance registered with the FIU and resumed operations in August 2023.
This strategic move set a new standard, and if Binance could return by following FIU regulations, Coinbase would be ready to tread the same lane.
According to TechCrunch reports, Coinbase now actively engages the FIU with other important regulations to meet compliance requirements.
However, challenges still persist. India now imposes a 30% capital gains tax on crypto profits and a 1% TDS on every transaction, policies that have driven many traders to offshore platforms. The Securities and Exchange Board of India (SEBI) also proposed multi-regulatory oversight, which would bring clarity and ease bureaucratic hurdles.
Can Coinbase Succeed This Time?
While Binance’s return may have set a roadmap, Coinbase faces additional scrutiny. Unlike Binance, which resumed operations after paying fines, Coinbase’s previous exit left Indian regulators cautious. The exchange will need to prove its commitment to compliance and transparency.
Ajay Seth, India’s Economic Affairs Secretary, recently stated in a recent interview, “Our approach to cryptocurrencies cannot be unilateral. These are global assets, and regulations must reflect that.” This suggests a shift towards structured oversight, but how soon this will materialize remains uncertain.
However, as India emerges as a key market for cryptocurrency despite strict regulations, Coinbase’s re-entry signals hope for the country’s crypto industry.
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