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The company has reportedly reinitiated discussions with Indian policymakers and regulators, including the Financial Intelligence Unit (FIU), aiming to navigate the country’s evolving legal framework for digital assets.
India’s regulatory landscape for cryptocurrencies remains complex, with several legal and financial challenges for businesses operating in the sector. The government has not explicitly banned cryptocurrencies but has imposed strict tax policies and compliance requirements that have significantly impacted trading volumes and investor sentiments.
Read more: RBI governor hints at shift in cryptocurrency stance
Coinbase launched its services in India in April 2022, integrating with the Unified Payments Interface (UPI) for smooth transactions. However, the National Payments Corporation of India (NPCI), which oversees UPI, soon clarified that it was not aware of any crypto exchanges using the payment system. As a result, Indian banks and payment processors withdrew support which forced Coinbase to suspend trading services in India. This reflects broader concerns about the regulatory uncertainty surrounding digital assets in India.
One of the most significant hurdles for crypto firms is the taxation framework introduced in 2022. The government imposed a 30% tax on crypto gains, similar to gambling and lottery winnings, along with a 1% tax deducted at source (TDS) on every transaction exceeding ₹ 50,000. These tax policies led to a drastic decline in trading volumes with some reports indicating an over 70% drop in daily trade volumes on Indian exchanges.
The lack of banking support has made it difficult for crypto businesses to operate smoothly on the Indian soil. The Reserve Bank of India (RBI) has consistently expressed concerns about the risks associated with cryptocurrencies, including money laundering, terror financing, and financial instability.
Read more: Budget 2025: How the govt plans to track crypto transactions better | Explained
While the Supreme Court overturned the RBI’s 2018 ban on crypto transactions in 2020, banks have continued to hesitate in offering services to crypto-related businesses due to regulatory ambiguity.
Coinbase, however, has reportedly maintained its presence in India particularly through its engineering and technical teams. It has been investing in blockchain talent, Web3 innovation, and compliance measures. Reports suggest that it is now focusing on building a sustainable and regulatory compliant model to re-enter the market.
The company’s chief legal officer, Paul Grewal, has been echoing the need for clear and predictable regulations for crypto businesses in India. He has previously emphasised that a structural legal framework would support innovation along with ensuring consumer protection and financial security, as per TechCrunch.
Read more: Malware-infected apps found on Apple’s App Store, targeting crypto wallets
Industry experts argue that India’s approach to crypto regulation will play a crucial role in determining the sector’s growth.
“A well-defined compliance framework can enhance investor confidence and encourage foreign companies to operate in India without regulatory uncertainty,” Atul Pandey, Partner, Khaitan & Co, told CNBC-TV18.
A more transparent and industry-friendly policy could make India one of the significant digital asset markets globally, whereas continued uncertainty may push crypto startups and investors towards more crypto-friendly jurisdictions.
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Pandey also mentions that it is important for companies to adhere to the existing compliance framework, such as RBI’s KYC and AML guidelines and FEMA regulations, and handle Indian users’ data under the Digital Personal Data Protection (DPDP) Act.
Coinbase has yet to respond to CNBC-TV18’s request for comment. However, its renewed engagement with the regulators suggests that there could be long-term potential in the country’s digital economy. Last year, its industry peer Binance had resumed operations in India after a seven-month regulatory hiatus. For now, Coinbase aims to strike a balance between compliance and accessibility in one of the world’s fastest-growing digital markets.
