Priyanka Tiwari
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Coinbase, an international crypto trading platform, has applied to register with India’s Financial Intelligence Unit (FIU) as a part of her global expansion plans which begins with India later in the year, which includes expansion into crypto trading services.
This move comes as many pundits are talking about the crypto sector which has gotten a lot more dynamic with the pro-cryptocurrency policies from the President of the United States, Donald Trump. Coinbase becomes the third competitor to enter India after Binance and KuCoin which is considered a major hub for cryptocurrency.
In her blog post on March 11, the exchange disclosed that they will be rolling out their first retail offerings later in the year coupled with further capital expenditure and diversification of service offerings.
“We’re committed to building in markets that believe in the potential of crypto and onchain innovation,” commented John O'Loghlen, Regional Managing Director for APAC at Coinbase.
He remarked, ""We are happy to expand our investment here, and we make sure we respect the rules and regulations because India is one of the most fascinating market opportunities in the world today.”" As per the blogpost, India’s emergence as a “global technology powerhouse, home to one of the most vibrant startup ecosystems, naturally makes it a target for the international expansion of Coinbase.”
“The country has rapidly grown into an onchain development hub, with its share of global developers increasing from 3 percent in 2018 to 12 percent in 2023. India now has the highest concentration of talent in the onchain space among emerging economies,” the exchange said.
In 2023, after the company had issues with the Reserve Bank of India (RBI) and began offering UPI services on the exchange, Coinbase stopped its exchange services. However, the company kept expanding its backend tech support within the country without anybody noticing.
O'Loghlen observed, ""West India's entrepreneurial spirit and developer community is something else altogether.”"
“When it comes to building global companies, young Indian entrepreneurs have all too often been left to build overseas. With Crypto, that can change. We seek to give a new generation of builders the ability to remain home, innovate, and scale globally by expanding access to Base and trusted platforms,” he noted.
Grewal previously served as Coinbase’s Chief Legal Officer. He has recently joined the Board of the U.S.-India Business Council (USIBC). The USIBC has a very important part in driving forwards the commercial relationship between the two nations, and Coinbase is eager to take part in this discussion because they will benefit greatly from it."
Second Innings
About a year after the government introduced exorbitant taxes on cryptocurrency trading, Coinbase launched in India in April 2022. Additionally, there were further complications with enabling payments via UPI to purchase or trade cryptocurrencies on the platform. Despite these advances, there is still lack of access to banking services as well as the ability to withdraw in INR which makes the situation far more dire.
The platform had previously stated that, in 2022, it would increase its headcount from 300 in its Indian tech hub to over a thousand.
While it prided itself with UPI payment options as one of it's USPs, it had to abandon it due to regulatory issues.
Mike Godwin, one of the directors within the monitoring and investigation department of the FBI, claimed that the Reserve Bank of India exercised some form of “soft pressure” on Coinbase sometime in May 2022 in his earnings conference call.
In September 2023, the company said in a statement to the Indian customers that it will no longer provide services to them, and all funds need to be withdrawn by September 25. They later changed this date to October 31.
Increased competition
Many offshore exchanges, including Binance, KuCoin, OKX, Houbi and 5 other exchanges were banned in the start of 2024 for not complying with local anti-money laundering policies and not having appropriate registration for the country.
Domestically, competition will be tough for local crypto exchanges now that Coinbase, Binanace, and KuCoin have started operating within the country.
However, in talking to local exchanges last week, it appears that no one is losing sleep over any of this. Speaking at the Moneycontrol Global Wealth Summit, Sumit Gupta, the Co-founder and CEO of CoinDCX, remarked that Indian exchanges will not only survive, but will prevail as the global competition will “create the market” for them.
He further added, “Let them set the field. But in the end, after 5 to 10 years, we Indian domestic players will have a sizable share in the system. I do believe that it’s going to be a heavily regulated industry, eventually. And when regulations are placed, it is very difficult to operate. Only the seriously committed long-term players win the market. ”
Edul Patel, Co-Founder of Mudrex, agrees and adds, “There are certain dynamics that are required for a small market to become a big market, and this requires more and more players to enter. This is exactly what we have started to witness.”
“As I said, clarity is improving which is prompting more and more larger global players to come in a market like India which is already known to be a very big market and then spend time, money, and people and educate them and help them understand what this asset class is about,” he argues.
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