In a surprising turn of events, Coinbase, one of the world’s largest cryptocurrency exchanges, has announced the discontinuation of its services in India. This decision follows a series of regulatory challenges that have confronted the exchange since its launch in the country on April 7, 2022.
Coinbase’s foray into the Indian crypto market was initially met with great anticipation. However, shortly after its launch, the exchange faced a roadblock in the form of regulatory pressures. Specifically, the Reserve Bank of India (RBI) forced Coinbase to disable its United Payments Interface (UPI) services due to concerns related to cryptocurrency transactions.
Brian Armstrong, Coinbase’s CEO, acknowledged the situation during an earnings call, describing the RBI’s approach as ‘soft pressure’ aimed at discouraging crypto-related UPI payments within the Indian market.
On September 10, 2023, Coinbase sent an email notification to its Indian users, informing them of the impending discontinuation of “all services” by September 25, 2023. Users have been advised to withdraw their funds before the stipulated date. Additionally, new user sign-ups from India have been temporarily suspended.
Coinbase cited a routine review that revealed certain accounts were non-compliant with the exchange’s updated standards. These accounts will be disabled, and affected users are encouraged to withdraw their balances by the provided deadline.
It’s important to note that not all Indian users are affected by this decision. Only those whose accounts didn’t meet Coinbase’s new standards will be impacted. Coinbase has reiterated its commitment to the Indian market in the long term and expressed its intent to explore alternative ways to strengthen its presence.
While the RBI’s stance has applied ‘soft pressure’ on Coinbase’s operations, it’s worth noting that the Indian Supreme Court has previously ruled that cryptocurrencies cannot be banned in India. This legal backdrop adds an interesting layer of complexity to Coinbase’s decision.
Last year, in response to disabling UPI services, Coinbase made the difficult decision to lay off approximately 8% of its Indian workforce.
Despite these challenges, Coinbase has investments in two Indian cryptocurrency unicorns: Coinswitch Kuber and CoinDCX, reflecting their ongoing interest in the Indian crypto ecosystem.
While Coinbase is making adjustments to its operations in India, the exchange is not completely pulling out. Instead, it remains dedicated to the Indian market and intends to continue its presence in different capacities.
The evolving crypto regulatory landscape in India, combined with Coinbase’s commitment to adapt and engage with local authorities, will likely determine the future trajectory of this influential exchange in one of the world’s most promising crypto markets.
