Coinbase Eyes India Re-entry Amidst Crypto Policy Shifts

Coinbase, a leading cryptocurrency exchange, is actively engaging with Indian regulators to re-enter the Indian market after suspending operations in June 2023. The company is in discussions with authorities, including the Financial Intelligence Unit (FIU-IND), to comply with local regulations and resume services.

The Indian cryptocurrency landscape is evolving, with the government reassessing its approach to crypto regulation. A discussion paper on the subject is expected in September 2024, indicating a potential shift in policy. Coinbase's move to re-enter the market comes amidst these changes and may be influenced by recent developments in other countries, such as the United States.

Coinbase's previous attempt to establish operations in India in 2022 was short-lived. The exchange launched services with support for the United Payments Interface (UPI) system but had to suspend operations after just three days when India's National Payments Corporation declined to acknowledge their presence. Coinbase CEO Brian Armstrong later revealed that the company faced "informal pressure" from the Reserve Bank of India, leading to the trading halt.

The timing of Coinbase's potential return depends on securing necessary approvals, including an operating license from the FIU. This process follows the path of competitor Binance, which successfully resumed its operations in India in August 2023 after a seven-month ban due to compliance issues.

The Indian crypto market currently operates under strict tax regulations. Since 2022, the country has imposed a 30% tax on crypto income and a 1% tax-deducted-at-source on all crypto transactions. These measures have affected market growth, though India maintains one of the largest web3 developer communities globally.

A Coinbase spokesperson expressed optimism about the Indian market, stating that the company "is excited by the opportunities in the Indian market and intends to comply with applicable regulatory requirements." However, they did not provide specific updates regarding their FIU registration status.

In a related development, Paul Grewal, Coinbase’s chief legal officer, has joined the board of directors of the U.S.-India Business Council, part of the U.S. Chamber of Commerce. Grewal highlighted India's growing importance in the web3 ecosystem, noting that the country's share of global web3 developers has increased fourfold to 12% since 2018.

The potential re-entry comes at a time when