This will not be Coinbase’s first attempt to launch in India, as it previously had to suspend support for the Unified Payments Interface (UPI) payment instrument just three days after its official launch event in April 2022. Coinbase’s history in India dates back to 2017, when Indian users could create accounts and trade cryptocurrencies. However, its operations then were relatively limited due to regulatory uncertainties. In 2018, the Reserve Bank of India (RBI) imposed a banking ban on cryptocurrencies, which effectively made it unfeasible for crypto exchanges to operate in India, as financial institutions were ordered to break off all ties with businesses dealing with virtual currency within three months. This ban was subsequently overturned by India’s Supreme Court in 2020, which revived the possibility for crypto exchanges to re-enter the market with greater freedom to operate.
After the Supreme Court ruling, Coinbase began ramping up its operations in India by offering services such as Coinbase Pro (now known as Coinbase Advanced), which was aimed at professional traders, and launching a significant recruitment drive. The cryptocurrency market experienced massive growth in that period, and Coinbase benefited from this boon as one of the leading exchanges globally.
Coinbase’s registration with the FIU is a significant milestone and could indicate a subtle but important shift in regulatory perceptions toward cryptocurrencies, especially as India seeks to position itself as a leading financial and technology hub in Asia. However, the regulatory environment in India remains volatile. For instance, the tax framework for cryptocurrencies proposes a 30% tax on earnings from cryptocurrency transactions and a 1% tax deducted at source (TDS). This was seen as a mixed signal from the government, as it indicated both recognition of cryptocurrency as a legitimate asset class and yet simultaneously, a tighter regulatory approach. The imposition of taxes also dampened some enthusiasm in the Indian market, and many market participants hold an overarching fear that the government may still introduce a law banning cryptocurrencies in the future.
Even then, India’s attractiveness as a market makes it too difficult to pass up, especially with the global trend toward broader crypto adoption and the rise of blockchain and digital assets in finance. Coinbase also hopes to benefit from greater economic cooperation between the US and India, and the company’s expansion into India coincides with Coinbase’s Chief Legal Officer joining the Board of the US-India Business Council (USIBC). Coinbase is once again attempting to position itself as a leading player in India’s rapidly evolving digital currency landscape and potentially play a major role in shaping the country's development in blockchain innovation. Hot on the heels of Coinbase are competitor exchanges including Binance, Bybit, and KuCoin, which will also be registering with India’s FIU.