Coinbase Resumes Operations in India After Two-Year Hiatus, Fiat Accessibility Expected by 2026

Coinbase has officially restarted its registration process in India after a two-year break, signaling its return to the second-largest internet market in the world. The exchange plans to integrate fiat currency capabilities by 2026.

Key Takeaways

Coinbase has reopened registration in India after a two-year hiatus.
The exchange plans to introduce fiat capabilities by 2026.
The return involves strategic compliance efforts with Indian regulations.
India has strict cryptocurrency tax laws, impacting trading practices.
Coinbase aims to build trust through a secure and user-friendly platform.

Coinbase Resumes Operations in India After Two-Year Hiatus, Fiat Accessibility Expected by 2026

Currently, Coinbase offers crypto-to-crypto trading and is actively working towards re-establishing full-service operations that will enable Indian users to deposit rupees and directly purchase digital assets on the platform.

The San Francisco-based company initially made its entry into the Indian market in April 2022, but was compelled to halt operations shortly after due to the National Payments Corporation's refusal to recognize its usage of the Unified Payments Interface.

By September 2023, Coinbase had completely withdrawn from India, requiring users to sell their holdings and move funds to other platforms.

Strategic Compliance Efforts Lead to Market Re-Entry

John O’Loghlen, Coinbase’s regional director for Asia-Pacific, explained to TechCrunch that the company's decision to exit the market posed a significant commercial risk. At the India Blockchain Week, he noted that requiring users to close their accounts deviated from standard business practices but allowed Coinbase to start fresh in terms of regulatory compliance.

In 2024, the company engaged with India’s Financial Intelligence Unit to achieve approval for its registration and launched early access in October before rolling out general availability.

Coinbase is now joining major global platforms, including Binance, KuCoin, and Bybit, in gaining authorization from the Financial Intelligence Unit. These competitors encountered similar regulatory hurdles, especially after the government agency enforced stricter regulations on offshore exchanges in January 2024, which resulted in blocking websites and removing their apps from digital stores.

Most of them managed to obtain compliance approvals after paying considerable fines.

Additionally, Coinbase has increased its investment in the Indian market by injecting more capital into local exchange CoinDCX, valued at $2.45 billion. The American company has over 500 employees across the country and is continuing to hire for both domestic and international roles. Notably, Paul Grewal, Coinbase's chief legal officer, has recently joined the U.S.-India Business Council board to enhance commercial relations.

Challenging Tax Environment Presents Obstacles

India implements one of the world's most stringent taxation systems for cryptocurrency, with a hefty 30% tax on profits and no provision for traders to offset losses. The government also imposes a 1% deduction on each transaction, which discourages frequent trading and has led approximately 90% of Indian crypto transactions to shift to offshore platforms.

When combined with mandatory surcharges and extra fees, the effective tax rate for high-income traders can soar to 42.7%.

O’Loghlen recognized these financial barriers and expressed hope that Indian authorities will eventually ease the restrictions to facilitate digital asset ownership.

The Reserve Bank of India has consistently opposed cryptocurrencies, citing concerns over financial stability, system risks, and potential money laundering. Recently revealed government documents indicate that officials are reluctant to enact comprehensive crypto regulations, fearing that official recognition may spur mainstream adoption and create systemic financial risks.

Despite such regulatory challenges, India remains one of the top countries for global cryptocurrency adoption, with residents collectively holding around $4.5 billion in digital assets. Tax authorities have also ramped up investigations, targeting over 400 high-net-worth individuals suspected of tax evasion via peer-to-peer transactions on platforms like Binance, and have requested regional office reports by mid-October.

Building Trust Through Enhanced User Experience

According to O’Loghlen, Coinbase aims to set itself apart by focusing on security and user-friendliness. He stressed the importance of developing intuitive interfaces similar to widely-used Indian consumer applications.

“We want to be recognized as the trusted exchange, ensuring that your funds remain safe with us,” he stated.

“We won’t reach a larger audience without a seamless user interface and a trustworthy experience that allows onboarding in just a few minutes.”

Coinbase's return coincides with India's rise as a significant hub for blockchain development, with its share of global Web3 developers seeing considerable growth in recent years. Nevertheless, the operational landscape remains complex, as government officials continue to advocate for the Reserve Bank’s digital rupee while imposing heavy taxes on private cryptocurrencies lacking official backing.