Coinbase Exits Indian Crypto Scene Amid Regulatory Hurdles

Coinbase plans to stop all services for users in India amid the concern about crypto regulations 

Coinbase, a US-based cryptocurrency exchange, plans to stop all services for users in India, the exchange has informed some customers through email. This development comes after the crypto exchange faced regulatory scrutiny by policymakers in India as well as the US. As per the email sent by the crypto exchange, Coinbase will be discontinuing services in India after September 25. Customers have been advised to withdraw their funds from their accounts. Coinbase Co-founder and CEO Brian Armstrong visited India last year and questioned “informal restrictions” on crypto trading by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI). 

He also said that India is a unique market for crypto due to mixed responses from regulators, policymakers, and other authorities. “India is a unique market in the sense that the Supreme Court has ruled that they can’t ban crypto, but there are elements in the government there, including at the Reserve Bank of India, who don’t seem to be as positive on it. And so it’s been called a ‘shadow ban’. They’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” the crypto exchange founder noted. According to a TechCrunch report, the crypto exchange has now warned customers in India that “it will be discontinuing services for them after September 25 and advising them to withdraw any funds they have in their accounts”.

History of Coinbase in India 

One of the world’s leading cryptocurrency exchanges has had a history in India marked by both entry and exit due to regulatory challenges. Here’s a brief overview:

Initial Entry (May 2019): Coinbase first entered the Indian market in May 2019, offering its services to Indian cryptocurrency enthusiasts. This move was seen as a significant step toward expanding its global presence.

Trading Services Launch (June 2020): In June 2020, Coinbase officially launched its trading services in India, allowing users to buy, sell, and trade a range of cryptocurrencies. This marked the beginning of its active operations in the country.

UPI Payment Suspension (July 2020): Coinbase’s entry into the Indian market was met with enthusiasm. However, its decision to enable payments via the Unified Payments Interface (UPI) faced challenges due to regulatory concerns. Several banks in India reportedly disabled the UPI option for crypto-related transactions, following verbal instructions from the National Payments Corporation of India (NPCI).

CEO’s Visit and Concerns (2021): Coinbase Co-founder and CEO Brian Armstrong visited India in 2021 and expressed concerns about what he referred to as “informal restrictions” on crypto trading imposed by the Reserve Bank of India (RBI) and the NPCI. He suggested that Coinbase had to halt its trading services in India due to this “informal pressure.”

Service Discontinuation (September 2021): Coinbase subsequently decided to discontinue its services for Indian users, citing regulatory challenges as a primary reason. It warned its Indian customers to withdraw their funds from their accounts by September 25, 2021.

Encouraging Coinbase Wallet Usage: In response to the service discontinuation, Coinbase disabled new user sign-ups in India for its exchange and encouraged them to download Coinbase Wallet, a self-hosted cryptocurrency wallet solution.

Regulatory Discussion at G20 Summit: The regulatory landscape for cryptocurrencies in India was a topic of discussion at the G20 Summit held in New Delhi. Both the Finance Minister, Nirmala Sitharaman, and Prime Minister Narendra Modi addressed the need for global standards and potential regulations regarding cryptocurrencies.

Coinbase’s journey in India highlights the challenges faced by cryptocurrency exchanges in navigating the evolving regulatory environment in the country. While it initially sought to provide its services to Indian users, it ultimately decided to exit the market due to regulatory pressures and uncertainties. The future of crypto regulations in India remains a significant topic of interest for both industry participants and regulators.