|
Getting your Trinity Audio player ready… |
United States-based Coinbase (NASDAQ: COIN), one of the world’s largest digital asset exchanges, has registered with India’s Financial Intelligence Unit (FIU), enabling the exchange to offer “cryptocurrency trading services” in the country in a compliant way.
The exchange plans to launch its initial retail services later this year, followed by additional investment and products in India thereafter.
“We’re committed to building in markets that believe in the potential of crypto and onchain innovation,” John O’Loghlen, regional managing director for APAC at Coinbase, said in a blog post. “India represents one of the most exciting market opportunities in the world today, and we’re proud to deepen our investment here in full compliance with local regulations.”
Coinbase’s registration with India’s FIU marks a significant milestone in its international expansion strategy, the blog said. As India continues to establish itself as a major technology leader with a thriving startup ecosystem, it presents an “ideal opportunity” for Coinbase’s international growth. The nation has quickly become a hub for on-chain development, with its global share of developers rising from 3% in 2018 to 12% in 2023. According to Coinbase, India now leads in the concentration of on-chain talent among emerging markets.
“India’s developer community and entrepreneurial energy are unmatched,” O’Loghlen said.
“But too often, young Indian entrepreneurs have felt forced to look abroad to build global companies. Crypto can change that. By expanding access to our trusted platform and tools such as Base, we aim to empower a new generation of builders to stay home, innovate locally, and scale globally,” he added.
In addition to the regulatory milestone, Paul Grewal, Coinbase’s Chief Legal Officer, was recently appointed to the Board of the U.S.-India Business Council (USIBC), underscoring Coinbase’s commitment to fostering strong ties between the two economies. The USIBC plays a pivotal role in advancing the U.S.-India commercial relationship, Coinbase said in its blog.
In 2022, Coinbase launched its operations in India, erroneously claiming that local users could fund their accounts using the state-run Unified Payments Interface (UPI). India’s flagship UPI, an example of effective Digital Public Infrastructure (DPI), is recognized as one of the world’s most successful real-time payment systems.
The National Payments Corporation of India (NPCI), which runs the UPI, rejected this assertion. That took Coinbase and several other crypto exchanges in India by surprise because they had relied on the UPI payments interface without any protests by the NPCI. This marked a rocky start to Coinbase’s Indian venture, and later that year, Coinbase ultimately decided to exit the market.
The challenges faced by Coinbase and similar foreign digital asset exchanges are a stark reminder of the difficulties foreign companies encounter when trying to establish themselves in India’s dynamic yet often uncertain regulatory landscape. As the country adapts to new technologies and emerging industries, its regulatory environment often remains inconsistent and uncertain, creating hurdles for global businesses. Companies attempting to navigate this shifting terrain must be prepared to contend with a complex and sometimes unpredictable framework that can pose substantial risks, particularly in sectors like ‘cryptocurrency’ and other innovative technologies.
Regulatory milestone
Coinbase’s registration with FIU is a regulatory milestone and follows the footsteps of rival exchange Binance, who also registered with the Indian agency after paying a $2.2 million penalty for non-compliance with local regulations. KuCoin digital asset exchange also registered with India’s FIU after paying a penalty of $41,000. Singapore-based Liminal Custody has become a FIU-registered entity and a compliant digital asset custody for Indian institutions.
However, Seychelles-headquartered OKX shut down its India operations in 2024, citing regulatory hurdles.
In January 2024, India blocked access to foreign digital asset exchanges, including OKX, Binance, and Kucoin, on the grounds of non-compliance. Apple (NASDAQ: AAPL) pulled some foreign exchange apps from its App Store, while Google (NASDAQ: GOOGL) delisted the trading platforms from its Play Store in India.
India also imposes one of the harshest taxation on digital assets trading—a 30% flat tax on all digital currency income with no provision to offset losses and a 1% tax deducted at source (TDS) on all transactions above INR 10,000 ($114). The South Asian nation is the fastest-growing major economy and is expected to become the world’s third-largest economy by 2028, luring investors and corporations to be part of India’s growth story despite the high taxation and regulatory limbo.
While the world’s most populous nation is looking to regulate the digital assets space, Finance Minister Nirmala Sitharaman said last year that ‘cryptocurrencies’ cannot be a legal currency in India. Moreover, India said there is no fixed timeline for introducing comprehensive regulatory guidelines for virtual digital assets (VDAs) in the country. With high taxation and no clear legislation in sight, India’s digital asset exchanges are likely looking at a consolidation in 2025, with smaller exchanges either shutting down operations or merging with larger ones.
Watch: Bringing the Metanet to life with Teranode
Recommended for you
CoinGeek – Read More