Coinbase Returns to India: Navigating the Regulatory Maze to Re-enter the Market
As is well known, the Web3 industry is a constant battlefield between regulators and market participants, where every step forward is accompanied by legal complexities and new restrictions. In many countries, governments are trying to establish control over the cryptocurrency sector, citing security, taxation, and financial stability issues. However, despite these obstacles, major players continue to seek ways to adapt, in order to stay on the market and develop new financial technologies. Today, Coinmooner wants to discuss this issue in more detail by looking at the recent example of the return of the cryptocurrency exchange Coinbase to India.
The American cryptocurrency exchange Coinbase plans to resume its operations in India after a break of more than a year. Over the past few months, the platform’s team has been actively engaging with various government agencies, including the Indian Financial Intelligence Unit (FIU). According to sources from TechCrunch, these efforts are aimed at obtaining the necessary permissions and complying with local legislation, which will allow the exchange to once again offer services to users in the country.
Coinbaselaunched its operations in India in April 2022, but soon faced serious regulatory barriers. Just days after launching, the platform was forced to suspend support for payments via the Unified Payments Interface (UPI), which significantly limited its market capabilities. By June of the same year, the registration of new users on the Indian version of the platform was completely halted. Despite this, the official cessation of services for Indian clients occurred only on September 25, 2023. However, later Coinbase explained that this step only applied to accounts that did not meet the new standards and did not mean a complete exit from the Indian market.
The Battle of Regulations: Coinbase Plans Comeback in India Despite Legal Hurdles
Against the backdrop of these events, it is worth noting that India has traditionally taken a tough stance on cryptocurrencies. The Reserve Bank of India (RBI) has long expressed concerns about their potential impact on the country’s macroeconomy, pointing to risks associated with money laundering and financial stability. In 2023, the FIU sent official notices to several offshore cryptocurrency exchanges, including Binance, KuCoin, OKX, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. These companies were accused of failing to comply with Indian legislation regarding anti-money laundering under the Prevention of Money Laundering Act (PMLA).
As a result, the mentioned exchanges faced severe restrictions: their websites were blocked, and their apps were removed from the App Store and Google Play. However, some platforms, such as Binance and KuCoin, were able to resume operations after successfully registering with the FIU and paying fines. This shows that despite strict regulation, cryptocurrency companies can adapt to new requirements and find compromise solutions to continue their operations.
Another serious issue for the crypto industry in India is the high tax rates. Currently, cryptocurrency transactions are subject to a 30% capital gains tax, as well as a 1% TDS (tax deducted at source) on each transaction. These measures have forced many Indian traders to switch to offshore platforms, leading to a significant decline in trading volumes within the country. Nevertheless, a recent initiative by the Securities and Exchange Board of India, proposing multilateral oversight of cryptocurrencies, may indicate potential changes in regulation and a softening of the government’s policy in the future.
Coinmooner also wants to remind its readers that security in the Web3 industry plays a key role. It is important to always use advanced protection methods, ensure the safety of personal data and financial assets, and follow cybersecurity rules. In the face of growing regulation and new threats in the digital asset market, awareness and caution help users minimize risks and continue to effectively use the opportunities provided by cryptocurrency technologies.
