In response to the ever-mounting regulatory pressures in both India and the United States, Coinbase, a well-known US-based cryptocurrency exchange, has taken a significant step by deciding to cease all its services for its user base in India. This momentous decision was communicated to its Indian customers through email notifications, with Coinbase clearly stating that its operations in India would come to a close after September 25. As a result, users have been strongly encouraged to take action and initiate the withdrawal of their funds from their Coinbase accounts.

Options for Indian Customers: What’s the Plan?

Coinbase’s email communication has thoughtfully laid out a plan for its Indian users: it’s time to withdraw those cryptocurrency holdings from the exchange. This option empowers users to liquidate their holdings and step out of their crypto investments. However, for those who wish to hang on to their digital assets, the alternative is to link their Coinbase accounts with other active cryptocurrency exchanges and smoothly transfer their funds.

The Genesis of Coinbase’s Decision

The chain of events leading to Coinbase’s exit from the Indian market can be traced back to its founder, Brian Armstrong. Last year, Armstrong made an official visit to India, introducing Coinbase’s services to the country. During his visit, he made an announcement that Indian cryptocurrency users would be able to deposit funds via the Unified Payment Interface (UPI).

However, this announcement faced swift opposition from the National Payments Corporation of India (NPCI).

UPI Deposits Suspended Across All Indian Crypto Exchanges

The NPCI promptly issued an official statement, clarifying that it had not authorized Indian cryptocurrency exchanges to use UPI for customer deposits. Their statement was unequivocal, “With reference to some recent media reports around the purchase of Cryptocurrencies using UPI, National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI.”

It’s vital to note that the suspension of UPI deposits affected all cryptocurrency exchanges, not just Coinbase.

‘Informal Pressure’ and the ‘Shadow Ban’

Brian Armstrong touched on this matter during Coinbase’s Q1 FY22 earnings call, revealing that the exchange faced “informal pressure” from the Reserve Bank of India (RBI), which led to the suspension of UPI deposits.

Armstrong expressed, “So a few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India, which is kind of the Treasury equivalent there.”

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Moreover, he emphasized the distinctiveness of India’s crypto landscape, characterized by diverse 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.’ Basically, they’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” elaborated Armstrong.

Coinbase’s Ongoing Commitment to India

Beyond its core exchange operations, Coinbase has demonstrated its commitment to the Indian cryptocurrency landscape by making substantial investments in platforms such as CoinDCX and CoinSwitch Kuber.

The Current State of Crypto Regulations in India

Indian regulators and policymakers have been diligently working on crafting regulations aimed at protecting retail crypto investors. Notably, in February 2022, Finance Minister Nirmala Sitharaman introduced a 30% tax on crypto profits and a 1% TDS on all transactions, effective from FY 2023.

Furthermore, India has been an advocate for uniform global cryptocurrency regulations, aiming to prevent regulatory arbitrage. Just over the weekend, the G20 nations unveiled a Leaders’ Declaration that endorsed the Financial Stability Board’s (FSB’s) high-level recommendations for regulating crypto-assets activities, markets, and global stablecoin arrangements.

Disclaimer: This article is intended for informational purposes only and should not be construed as legal or financial advice. Cryptocurrency regulations and policy decisions are subject to change and may vary by jurisdiction. Readers are encouraged to consult relevant authorities and conduct their research when dealing with cryptocurrency-related matters.