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In the latest development, crypto exchange Coinbase is planning to discontinue crypto trading services in India by the end of the month. The exchange warned its Indian customers through an email citing major regulatory challenges in India.
Reports suggest that Coinbase has already disabled users from signing on to the exchange while prompting them to download the Coinbase Wallet instead. As a result, Coinbase plans to discontinue its services in India from September 25 onwards. The exchange has also advised its Indian customers to withdraw any funds that they have in their accounts.
Coinbase’s decision to withdraw from India comes after an 18-month-long endeavor to reintroduce its services in the country. Despite their efforts, the company has faced significant challenges in gaining the approval of local authorities. This struggle has resulted in the departure of at least two prominent executives, including Durgesh Kaushik, who joined as Senior Director for Market Expansion last year.
Note that Coinbase is also an investor in Indian crypto exchanges such as CoinSwitch Kuber and CoinCDX. While Coinbase is probably looking for an exit from India, it continues to work on expanding its services. Last week, Coinbase announced that it’s planning to enter the crypto lending business for US institutional clients.
Coinbase Issues Clarification
Interestingly, the Coinbase emails were not aimed at Indian customers alone but at all those breaching the exchange’s standards. Instead, the suspension of trading activity is targeted at users who failed to meet the exchange’s updated standards.
Coinbase, stating that we’re discontinuing all services to accounts that no longer meet our updated standards. At this time, we do not know when we will be able to offer these services to you again.
[1 of 6]— Coinbase Support (@CoinbaseSupport) September 10, 2023
“It is possible that during the course of a recent routine review of our systems, some accounts may have been identified that no longer meet our updated standards. We will therefore be disabling these accounts and allow customers to update their information at a later date,” a Coinbase spokesperson added.
For Indian users, Coinbase issued an additional clarification stating: “We stopped allowing new user sign-ups on our exchange product in India back in June of this year. We maintain a robust tech hub in the country and offer live products, including our Coinbase Wallet. We are committed to India over the long term and continue to explore ways to strengthen our presence in this important market”.
Coinbase Faces Major Hurdles In India
Last year in 2022, Coinbase CEO Brian Armstrong personally flew to India to launch the crypto exchange. They were also quick to announce the support for India’s popular payments platform – Unified Payments Interface (UPI).
However, since the payment body, NPCI overseeing UPI refused to acknowledge Coinbase’s India launch, the exchange had to suspend the integration soon after. Coinbase said that they were committed to working with NPCI and other relevant authorities. But it seems that these things couldn’t materialize further.
In May of the previous year, Armstrong disclosed that Coinbase had to discontinue its trading service in India due to what he referred to as “informal pressure” from the Reserve Bank of India, the country’s central bank. Armstrong clarified that cryptocurrency trading is not illegal in India, and the country had only recently introduced taxation on it.
However, he noted that there were individuals within the government, including at the Reserve Bank of India, who did not appear to hold a favorable view of cryptocurrency. Consequently, there were reports of a “shadow ban” where soft pressure was applied behind the scenes to potentially restrict certain cryptocurrency-related payments, particularly those going through the UPI system.
During the recent G20 meeting in India over the last weekend, the countries unveiled a Leaders’ Declaration. All the G20 member nations stated that they endorse the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation and oversight of crypto activities.
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