Coinbase, the American cryptocurrency exchange, is making a bid to re-enter the Indian market more than a year after it ceased operations in the country. According to sources familiar with the matter, Coinbase is engaging with various Indian authorities, including the Financial Intelligence Unit (FIU), to secure the necessary approvals for its comeback.

The move comes after a tumultuous history in the South Asian market. Coinbase's previous attempt to launch services in India ended abruptly in 2022, just three days after its launch, due to regulatory issues. The exchange had introduced support for the widely used United Payments Interface (UPI) system, but India's National Payments Corporation, which oversees UPI, refused to acknowledge Coinbase's operations. This led to the trading halt, with Coinbase's CEO, Brian Armstrong, later disclosing that the company faced "informal pressure" from the Reserve Bank of India.

The Reserve Bank of India's stance has been a major hurdle for cryptocurrency exchanges operating in India. Although cryptocurrency trading is not illegal in the country, lenders largely refuse to do business with virtual asset firms to avoid upsetting the central bank. This has led to a challenging environment for crypto exchanges, with many entrepreneurs, investors, and officials citing the need for clearer regulations.

However, Coinbase's potential relaunch could signal a shift in the regulatory landscape. The FIU, which previously ruled that many exchanges, including Kraken and Binance, were "illegally" operating in India, has since required broader disclosures on user activities. Binance, the world's largest cryptocurrency exchange, resumed operations in India last August after registering with the FIU, establishing a precedent for foreign crypto exchanges seeking to operate in the country.

A Coinbase spokesperson told TechCrunch that the company is "excited by the opportunities in the Indian market and intends to comply with applicable regulatory requirements." However, the spokesperson declined to share any update on the FIU registration. The timing of Coinbase's potential relaunch depends on how long it takes to secure the necessary approvals, including a license to operate from the FIU.

Coinbase's interest in India is part of its broader international expansion plans. The company's CFO, Alesia Haas, recently commented on the company's plans to explore new markets at a Goldman Sachs conference. India, despite being a key overseas market for U.S. tech giants, has a relatively small crypto market, partly due to the local government's implementation of a 30% tax on crypto income and a 1% deduction on each transaction in 2022.

A re-entry into India could also help fill the void left by the implosion of the Indian exchange WazirX after the firm lost about half of its reserves in a heist. Currently, CoinSwitch and CoinDCX are the top Indian crypto exchanges, and both are backed by Coinbase. The company's re-entry could bring much-needed competition and stability to the Indian crypto market.

As Coinbase navigates the complex regulatory landscape in India, its success could have far-reaching implications for the global crypto industry. With the Indian market offering immense potential, Coinbase's re-entry could be a significant step towards expanding the company's global footprint.