Coinbase is planning to return to India over a year after it stopped its operations in the country, which has the largest population in the world.
The American cryptocurrency exchange is currently in talks with several Indian authorities, including the Financial Intelligence Unit (FIU), which monitors financial transactions in India.
This information comes from two anonymous sources who mentioned that discussions are still ongoing and private.
Coinbase’s efforts to reestablish itself in India come after a challenging past in the region. In August, Binance, the biggest crypto exchange globally, resumed its services in India after registering with the FIU, following a seven-month period of regulatory suspension. This move set an example for other foreign crypto exchanges looking to operate in India.
Previously, Coinbase’s attempt to launch in India ended suddenly in 2022. The exchange made a grand entrance in April of that year by introducing support for the widely used Unified Payments Interface (UPI), but had to halt operations just three days later when India’s National Payments Corporation refused to recognize Coinbase’s activities.
Brian Armstrong, the CEO of Coinbase, later revealed that the company faced “informal pressure” from the Reserve Bank of India, which led to the trading suspension.
Although trading cryptocurrencies is not illegal in India, many banks hesitate to work with virtual asset companies to avoid conflicts with the central bank, according to various entrepreneurs, investors, and officials.
The timeline for Coinbase’s potential return to India will depend on how quickly it can get the necessary approvals, including a license from the FIU.
The agency had previously stated that several exchanges, such as Kraken and Binance, were operating “illegally” in India. Many of these companies have since complied with the FIU’s requirements for more extensive disclosures about user activities.
A spokesperson for Coinbase expressed excitement about the opportunities available in the Indian market and stated the company’s intention to meet all regulatory requirements, although they did not provide an update on the FIU registration.
Coinbase’s interest in the Indian market aligns with its broader plans for international growth, as mentioned by CFO Alesia Haas during a recent Goldman Sachs conference.
Moreover, Paul Grewal, Coinbase’s chief legal officer, recently joined the board of the U.S.-India Business Council, which is part of the U.S. Chamber of Commerce.
He expressed his honor in joining the board to enhance the relationship between India and the U.S. in shaping the future of finance, noting that India has a rapidly growing web3 ecosystem, with a significant increase in the number of developers since 2018.
While India is an important market for U.S. tech companies, the local crypto market remains relatively small. This is partly due to the government imposing a 30% tax on crypto earnings and a 1% tax on each transaction in 2022.
A return to India could help fill the gap left by the collapse of the Indian exchange WazirX, which lost about half of its reserves in a security breach. Currently, CoinSwitch and CoinDCX are the leading crypto exchanges in India, both of which have backing from Coinbase.
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