US cryptocurrency exchange Coinbase has launched trading services in India today, which permits users to trade on Coinbase using the Unified Payments Interface (UPI) platform, the company said on Thursday. The company started testing UPI and the Immediate Payment Service (IMPS)-based payments last month.
However, Coinbase's entry is not without controversy. Shortly after the company's announcement, the National Payments Corporation of India (NPCI) dissociated it with crypto exchanges through a statement.
“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," the payments body said in the statement.
Coinbase said, on Monday, that it would hire 1,000 employees in India. On Thursday, Brian Armstrong, chief executive of Coinbase, added his company would also look at tier II and III cities to find local talent.
To be sure, this is not the first time that Coinbase’s crypto trading services are being availed by Indian users. Prior to its official entry in the country, crypto investors in India have been using Virtual Private Network (VPN) services to access the exchange to buy and sell crypto tokens. However, this is the first time that Indian users can access crypto trading services on Coinbase officially, using INR.
Pareen Lathia, co-founder of Buidler’s Tribe, called Coinbase’s entry to India a “seminal moment” for India’s cryptocurrency ecosystem. He said Coinbase’s official presence in India may lead to more opportunities for potential web3 startups in the country to seek funding.
Tech policy analyst, Prasanto K. Roy, corroborated that Coinbase entering retail trading is a “big deal”. He added that it lends “weight and credibility to crypto trading.”
With Coinbase’s entry, the top two crypto exchanges in the world now have stakes in India. Binance, on its part, owns WazirX which is India’s largest private crypto exchange in the country by trading volume.
Meanwhile, Coinbase's investment arm, Coinbase Ventures, has already invested over $150 million in India including in crypto unicorns, CoinDCX and CoinSwitch Kuber. Coinbase Ventures also plans to hold a pitch contest for Indian web3 startups with a total intended funding pool of $1 million. The contest is being held in partnership with Indian web3 startup incubator Buidler’s Tribe, with seven startups being selected out of 120 applicants.
That said, challenges remain. Coinbase’s initial public offering (IPO) on 14 April 2021 was a landmark moment in the history of cryptocurrencies in the world -- the company’s first listing on the US stock exchange Nasdaq saw it exceed its pre-listing reference price of $250 per share when it listed at $381 per share. However, volatility in the global crypto market and uncertainties regarding worldwide crypto regulations have seen it witness a drop in its valuation in the past one year.
Moreover, according to Roy, the “killer tax” in India (30% LTCG and 1% TDS) implies the government considers crypto a luxury. He added that the crypto sector will also have to tackle the fact that the Reserve Bank of India (RBI) continues to consider crypto as "bad”.