Coinbase has re-entered the Indian market, and this time it has arrived with a significant structural advantage over other foreign cryptocurrency exchanges operating in the country.

The exchange is now operating under a newly established local entity that is fully registered with India's Financial Intelligence Unit (FIU-IND), the country's designated agency for anti-money laundering and counter-terrorist financing compliance in the virtual digital asset sector. In addition to FIU-IND registration, the entity is compliant with India's local tax frameworks — a notable threshold, since India imposes a 30% tax on gains from virtual digital assets plus a 1% tax deducted at source (TDS) on each transaction, rules that pushed many offshore exchanges out of the formal Indian market after they took effect in 2022.

On that regulatory foundation, Coinbase has achieved what it describes as a major competitive breakthrough: a custom-built, bespoke Indian Rupee (INR) on-ramp and off-ramp. The feature allows users in India to deposit and withdraw funds directly in local currency, rather than relying on the workarounds that foreign exchanges without local banking rails have typically required.

The development marks Coinbase's return to India after its earlier attempt to serve the market ended in 2023, when the company suspended its UPI-based payment service shortly after launching, citing regulatory constraints at the time. Its renewed entry, this time through a locally registered and tax-compliant entity, signals a different approach to one of the world's largest markets for digital asset adoption.

For the broader industry, the arrival of a bespoke rupee on-ramp at a major foreign exchange changes the competitive landscape in India, where locally registered platforms have historically held an advantage precisely because they could offer seamless INR banking integration while offshore exchanges could not. Coinbase's registration and local currency rails close much of that gap. The move also stands out against the backdrop of India's broader tightening on offshore venues: in late 2023 and 2024, the FIU issued show-cause notices to several non-compliant foreign exchanges, and India's IT Ministry blocked access to a number of their websites, including Binance's, until they registered locally. Whether other major offshore exchanges follow Coinbase's route to full FIU registration and rupee banking rails is now a key question for how the Indian market consolidates.

Source: Economic Times Markets