US-based cryptocurrency exchange Coinbase confirmed on Tuesday, March 11, that it has secured the necessary approvals from the country’s Financial Intelligence Unit (FIU) to re-enter the Indian crypto trading market.
“Coinbase plans to launch its initial retail services later this year, followed by additional investment and products in India thereafter,” the company said in a press release. The announcement comes more than a year after Coinbase ceased operations in India due to regulatory challenges with UPI services.
In 2023, the Union government brought virtual digital assets (VDAs) such as cryptocurrencies under the Prevention of Money Laundering Act (PMLA), 2002. As a result, offshore and onshore VDA service providers, including crypto trading platforms, are legally required to comply with obligations under the PMLA and be registered with FIU-IND as reporting entities.
FIU-IND is a central government agency that operates under the aegis of the Union Ministry of Finance. It is responsible for receiving, processing, analysing, and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.
The platform’s comeback follows other foreign crypto exchanges’ return to India. In August last year, Binance registered with the FIU-IND to resume operations in the country following a seven-month regulatory halt.
Coinbase could also fill the void left by Indian exchange WazirX, which lost about half of its reserves in a security breach last year. Other top Indian crypto exchanges such as CoinSwitch and CoinDCX are both backed by Coinbase.
“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. 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 statement.
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The company is also looking to expand its crypto developer platform in India. “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,” O’Loghlen said.
In 2022, Coinbase launched its crypto trading services in India with support for payments via the Unified Payments Interface (UPI) system. Just days later, Coinbase suspended its services after the National Payments Corporation of India (NPCI), the umbrella entity that oversees UPI, said it was not aware of any crypto exchange using the widely used digital payments service.
Later, CEO Brian Armstrong reportedly said that Coinbase had decided to halt trading after facing “informal pressure” from the Reserve Bank of India.
Cryptocurrency has a complicated status in India. While the Union government has not framed regulations to legalise crypto assets, it has implemented a 30 per cent tax on crypto income and a one per cent deduction on each transaction since 2022.
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The Union government has also appeared to be in support of blockchain development and central bank digital currencies (CBDCs) such as the RBI-issued e-rupee even as mainstream tokens like Bitcoin face regulatory uncertainty.
