India's Crypto Sector Eyes a Boost with Coinbase's Renewed Focus, Investment in CoinDCX CoinDCX says the latest investment will help enhance its product suite, introduce new onchain use cases for India, and expand into new markets.

India's crypto sector is back in the limelight, courtesy of Coinbase.

The US-based cryptocurrency exchange on Wednesday announced that it is investing (amount undisclosed) in the Indian cryptoexchange CoinDCX.

The latest investment round is an extension to the last fundraise, and values the domestic exchange at USD 2.45 billion post-money, CoinDCX stated in a release.

Note that Coinbase has been on CoinDCX's captable since 2020. In April 2022, Coinbase had joined CoinDCX's USD 135 million round, which valued the firm at over USD 2 billion.

"This investment underscores the potential we see in these regions. With over 1.4 billion people, growing tech adoption, and over 100 million crypto owners, India and the Middle East are set to play a big role in the future of crypto – and CoinDCX is a high-growth, financially sound business built for scale at the center of the region's massive growth opportunity," said Coinbase in a blog post.

To put things into perspective, India's crypto market is poised to cross USD 15 billion by 2035, according to a Reuters report.

"This investment adds to our growing presence in the region, where we also maintain local operations and other important local partners. Taken together, these steps reflect a clear commitment: we believe India and its neighbors will help shape the future of the global onchain economy. This transaction is subject to regulatory approvals and other customary closing conditions," Coinbase added.

CoinDCX Co-founder on the Partnership and Growth

Regulatory uncertainty, including high taxes on crypto transactions, and overall crypto market corrections had led to a significant drop in the funding momentum for crypto firms in India, specifically for the late-stage ones. With the new Coinbase and CoinDCX partnership, things may change.

Sumit Gupta, co-founder at CoinDCX, tells Entrepreneur India that Coinbase's decision to deepen their investment is a strong signal of confidence in both its execution and India's potential in the digital asset space.

"Coinbase shares our belief that India will play a pivotal role in shaping the global onchain economy. Their continued support brings global expertise, best practices in compliance, and a shared commitment to building responsibly. Together, we aim to accelerate India's transition from being a high-adoption market to becoming a global innovation hub...", he said.

Gupta also disclosed that the company's user base has grown steadily despite the market volatility. At the moment, CoinDCX has more than 2 crore registered users. He also noted that the average age of users was 25, which has now changed to closer to 30.

"That tells us investors are evolving, moving from curiosity to conviction. We're also seeing more participation from women and from tier 2 and 3 cities, which is incredibly encouraging for the future of India's digital economy," he added.

The company currently makes most of its revenue from the core exchange business. It also has a few adjacent verticals like international business, Web3 products, and strategic investments.

"Over time, we expect these newer verticals to grow faster as adoption deepens and more onchain use cases emerge," he said.

At the moment, annualised group revenue for DCX Group, which comprises CoinDCX (India), BitOasis (UAE and Bahrain), and Okto, stands at INR 1,179 crore, whereas annualised transaction volume across its products is at INR 13.7 lakh crore. The group's assets under custody are at over INR 10,000 crore.

Coinbase & India: Entry, Retreat, Re-entry

Coinbase's recent moves indicate that the American exchange cannot afford to ignore India's massive market, despite compliance and regulatory challenges. Even though there is and will be an appetite for cryptocurrencies, Coinbase's tryst with India has been rather peculiar.

As mentioned earlier, Coinbase has been eyeing the Indian market since 2020. The company made investments in India cryptoexchanges, including CoinDCX and CoinSwitch Kuber, through its venture capital arm, Coinbase Ventures.

A couple of years later, Coinbase launched its own exchange service in India amid much fanfare. One of the highlights of the announcement was the support for the local payment system, UPI. This essentially meant users could buy cryptocurrencies through UPI.

Interestingly, the National Payments Corporation of India (NPCI), which operates the UPI network, shortly issued a clarification stating that it was not aware of any crypto exchange using UPI.

Subsequently, the company withdrew its services in India.

During this phase, Coinbase CEO Brian Armstrong, in an earnings call, claimed that the company had to dwindle down operations owing to "informal pressure" from India's reserve bank. Armstrong claimed that the operations dwindled due to what he described as a "shadow ban" on the crypto sector.

Armstrong also noted that the Supreme Court of India had ruled out banning cryptocurrency in the country but "there are elements in the government there, including at Reserve Bank of India, who don't seem to be as positive on it."

By September 2023, Coinbase began notifying its Indian users that it would halt all exchange services in the country, owing to regulatory challenges. Users were asked to withdraw their remaining funds by a specific deadline. The company pivoted to focusing more on its global Coinbase Wallet for Indian customers.

Coinbase signalled its intention to return to the country when it announced registration with India's Financial Intelligence Unit (FIU). The renewed attempt, however, appeared to be more vigilant and compliant to the local rules and regulations.

Crypto & Regulatory Headwinds

Even as the Coinbase-CoinDCX partnership has renewed interest in the Indian crypto sector, it's important to note that regulatory uncertainty on the same has remained unchanged in the last couple of years at least.

Gupta tells Entrepreneur India that the industry currently needs clarity and parity, along with a progressive framework that enables innovation while maintaining accountability.

"India has already proven its leadership in fintech and payments; with the right policy framework, we can do the same in Web3. Our hope is to see taxation aligned more closely with other asset classes and a distinction made between genuine innovation and speculative activity," he said.

India's regulatory architecture is anchored by the Financial Intelligence Unit (FIU) registration regime. This is likely a nudge to the global player to rather integrate, localise and co-create with the local players instead of parachuting into the market.

Raj Kapoor, founder at the India Blockchain Alliance, tells Entrepreneur India that the tax structure acts like a secondary gatekeeper.

"The 30% flat tax on gains and 1% TDS function less as revenue instruments and more as behavioural filters — deterring speculative inflows while nudging serious players to structure operations domestically, often through FIU-registered Indian entities like CoinDCX, WazirX, or CoinSwitch. The result is a semi-permeable regulatory membrane: liquidity and capital may flow in, but control, data, and compliance remain firmly sovereign," he said.

Kapoor added that Coinbase's pivot signals that the age of unilateral global expansion is over.

"Instead, we are entering an era of compliance symbiosis where multinational exchanges must tether themselves to local, licensed entities to gain legitimacy and market share. This is a tactical adjustment and a strategic surrender to sovereign structure. Yet in that surrender lies a sophisticated form of power, access through alliance," he said.

Dr Sujata Seshadrinathan, Co-Founder and Director of IT and Process at Basiz Fund Services, tells Entrepreneur India that Coinbase's strategic choice signals that the path to long-term success in India lies through partnership, not parallel operations.

"It demonstrates the effectiveness of India's compliance-first approach, which calls for accountability, open reporting, and local governance. India with its rapid economic growth and maturing investment market represents a deep market for such players. The Coinbase strategy might end up serving as a model for other foreign exchanges hoping to engage in India's market in an ethical and sustainable manner," Seshadrinathan said.

Moreover, India has long contemplated the legitimacy of anything beyond fiat currency. The country is already experimenting with the digital rupee, also known as e-rupee, a tokenised digital version of the Indian currency, issued by the Reserve Bank of India RBI as a central bank digital currency (CBDC).

Is there any signaling to the domestic crypto players to focus on institutional segments? The CoinDCX cofounder does not think so.

"I don't see it as a zero-sum game. The CBDC and crypto serve different purposes within the digital economy. The e-Rupee is about efficiency in payments, while crypto represents ownership and participation in open networks. Retail participation will remain central to our mission... At the same time, we are expanding into institutional and DeFi segments, not as an alternative, but as an evolution," he opined.

Summing it up,

Coinbase's investment in the domestic exchange may have a larger impact on the local crypto ecosystem, which still has quite a few existing and new players. Moreover, there are hopes from the industry that it may further grease the policy wheels.

"For domestic regulators such as the RBI and the Ministry of Finance, this may serve as a confidence-building signal. It reaffirms India's regulatory strategy, which is focused on tax compliance, AML controls, and FIU registration. Which is able to draw in institutional funding without sacrificing supervision. The argument for a more formalised policy framework is strengthened, even though it would be premature to assume that this inevitably speeds up legislation," Seshadrinathan explained.