Coinbase Eyes a Comeback in India Amid Regulatory Softening
After stepping away from the Indian market in 2023, Coinbase now appears to be charting a path back, engaging in discussions with India’s regulators. Reports suggest the prominent U.S.-based cryptocurrency exchange has initiated conversations with the Financial Intelligence Unit (FIU) to explore a potential reentry. As regulatory conditions evolve, Coinbase’s move could signal a broader shift in India’s approach toward foreign crypto exchanges.
Strategic Engagement with Regulators
Coinbase’s renewed interest in India comes as the FIU has reportedly softened its stance on offshore crypto companies. A spokesperson for Coinbase acknowledged the company’s enthusiasm for the Indian market, emphasizing its intent to comply with local regulations. However, they declined to confirm whether the company had officially registered with the FIU yet.
This development surfaced shortly after Paul Grewal, Coinbase’s Chief Legal Officer, joined the board of the U.S.-India Business Council (USIBC). The USIBC plays a pivotal role in fostering economic partnerships between Indian and U.S. firms, positioning Grewal’s involvement as a crucial link in Coinbase’s strategy.
A Complicated History in the Indian Market
Coinbase’s journey in India has been anything but smooth. The exchange officially ceased Indian operations in September 2023, instructing local users to withdraw their funds. This decision marked a significant retreat after earlier efforts to gain a foothold in the country.
Previously, Coinbase had run into regulatory roadblocks when, in April 2022, it launched support for India’s Unified Payments Interface (UPI) system. However, within three days, the National Payments Corporation of India disallowed such transactions, asserting that no crypto exchanges had legal recognition from the Reserve Bank of India (RBI). This abrupt suspension highlighted the uncertain regulatory environment that foreign crypto firms were navigating.
Despite these challenges, Coinbase had already embedded itself in the Indian crypto landscape through venture capital investments. Its funding efforts supported CoinSwitch Kuber and CoinDCX, two of India’s largest cryptocurrency trading platforms.
Grewal’s USIBC Appointment and the Future of Crypto in India
Coinbase’s potential return aligns with Grewal’s recent appointment to the global board of the U.S.-India Business Council. USIBC President, Ambassador Atul Keshap, welcomed Grewal, citing his deep expertise in fintech and digital assets as instrumental in shaping financial innovation between the two nations.
Grewal, in response, expressed his eagerness to strengthen U.S.-India financial collaborations, emphasizing India’s rapidly growing Web3 ecosystem. He highlighted that since 2018, India’s share of global Web3 developers has surged to 12%, marking the highest growth rate among emerging markets. “India’s startup scene, developer community, and institutional adoption are driving a bold wave of blockchain innovation,” Grewal noted.
India’s Changing Stance on Crypto Regulation
India has seen a complex relationship with cryptocurrency regulation. In late 2023, the FIU imposed restrictions on offshore exchanges, creating an uncertain landscape for foreign platforms. Yet, by mid-2024, signs of a policy shift emerged as Binance and KuCoin secured FIU registrations after settling compliance penalties in May 2024. Reports later in September 2024 hinted at further approvals for two more offshore exchanges, suggesting that India is becoming more receptive to international players.
Coinbase, like many global exchanges, is closely monitoring these developments. The company has reiterated its commitment to adapting to regulatory shifts worldwide, ensuring compliance wherever it operates. Given India’s increasing prominence in the global crypto adoption rankings, a well-strategized return could position Coinbase favorably in a burgeoning market.
Conclusion
As Coinbase reengages with Indian regulators, the trajectory of its return remains uncertain but promising. The firm’s past challenges highlight the complexities of India’s regulatory environment, yet the latest signals from the FIU suggest a potential opening for offshore crypto firms. With Grewal’s appointment to the USIBC board aligning with broader financial innovation discussions between India and the U.S., Coinbase’s move could pave the way for a more structured and cooperative engagement in the Indian crypto space.
