Coinbase Eyes India Re-entry Amidst Regulatory Hurdles

Coinbase, the largest US-based cryptocurrency exchange, is actively working on returning to the Indian market after halting operations in 2022 due to regulatory hurdles. The exchange is engaging with Indian authorities, including the Financial Intelligence Unit (FIU), to secure approvals and comply with local regulations.

Coinbase's interest in India aligns with its broader international expansion plans. Its chief legal officer, Paul Grewal, was recently appointed to the US-India Business Council (USIBC) Global Board of Directors, highlighting the company's strategic push to strengthen ties between the US and India in fintech and digital assets.

Despite regulatory challenges, India remains a significant blockchain and cryptocurrency innovation hub. The country has seen a surge in Web3 adoption, with developers and startups actively contributing to the space. However, the local crypto trading market has struggled due to regulatory uncertainties and high tax burdens. Coinbase's return could shake up India's crypto market, particularly after the collapse of WazirX, which lost half of its reserves in a major security breach.

Coinbase is now taking a more calculated approach by ensuring regulatory compliance before relaunching services. The timeline for its relaunch remains uncertain, depending on how long it takes to obtain an FIU license and other necessary approvals. Analysts anticipate significant liquidity if an approval comes.

“Huge liquidity could flow in from this,” analyst Kyle Chassé observed.

Coinbase stock, COIN, soared on this news and was trading for $274.80 as of this writing.

Of note, however, is that this is not Coinbase's first attempt at adapting to India's regulatory environment. In late 2023, the exchange adjusted its services around the G20 Summit in the country, likely in response to changing regulations. This time, Coinbase appears to take a more calculated approach by ensuring regulatory compliance before relaunching services.

“…last time they got rekt by regulators. If they haven’t leveled up, it’s just another liquidity trap,” a user on X (Twitter) remarked.

Coinbase's return could provide competition and offer Indian traders a stronger platform, particularly after the collapse of WazirX. The Indian market is now dominated by CoinSwitch and CoinDCX, which are Coinbase-backed