India’s Crypto Stance: Coinbase Return Tests a Messy Rulebook
India still does not have a full crypto law. That’s the uncomfortable bit. It has Section 115BBH, Section 194S, anti money laundering oversight, and transaction monitoring, but not the larger answer: what is crypto supposed to be in India? My take: Coinbase’s return makes the gap harder to pretend away. Global exchanges want Indian users. They are also walking into a market where some rules bite hard and others still feel unfinished.
India is not leading on crypto regulation. It is not asleep either. The government taxes virtual digital assets, brings platforms under anti money laundering rules, and watches flows closely through the Financial Intelligence Unit. Most quick takes frame this as hostility. That’s only half right. What India has really built is a containment system without a complete VDA law, and Coinbase is now testing how much business can fit inside that box.
Coinbase’s India push matters. At India Blockchain Week, Coinbase Asia Pacific director John O’Loghlen called India a “North Star” for the exchange. Fine, that’s the conference line. But Coinbase also did the less glamorous work: it secured registration with India’s Financial Intelligence Unit in early 2025, reopened user registrations by October, and restored retail services by December. It added IMPS enabled INR deposits too, which gives traders a local currency route that fits the current compliance setup. For a listed exchange like Coinbase (COIN), whose stock traded around $120 to $130 in late 2023, this looks less like a splashy relaunch and more like a patient India bet. Boring plumbing matters. Without fiat deposits, retail adoption stays clunky. With them, trading Bitcoin (BTC), Ethereum (ETH), and other assets gets much easier.
The problem is the RBI. India’s central bank is still strongly against legalizing crypto, and it told a parliamentary panel that virtual digital assets create risks for an emerging economy like India. The RBI pointed to China and Qatar bans, then contrasted them with Europe’s stricter MiCA model. According to a report, it warned that VDAs could be used for terror funding and narcotics smuggling, and said offshore platforms are hard to track. After the meeting, committee head Bhartruhari Mahtab confirmed that the RBI does not support legalizing VDAs. Why does this matter? Because central banks shape the mood in other developing markets. If India keeps crypto boxed in, similar economies may hesitate before treating it like a normal risk asset.
The Institute of Chartered Accountants of India is pushing in a different direction. It supports a full VDA law and has offered guidance to make reporting and compliance clearer. So the split is real: the FIU is tightening supervision, ICAI wants cleaner rules, and the RBI still does not want legalization. Counter to the usual advice, “just regulate it clearly” may not be politically simple here. India’s current setup is much narrower than the EU’s MiCA regime, while the UK is moving toward a full framework by October 2027. The Financial Intelligence Unit issued AML and CFT guidelines in January 2026 and sent notices to 25 offshore VDA service providers for non compliance. The tax rules are already firm: Section 115BBH taxes VDA transfers at 30%, and Section 194S applies a 1% tax deducted at source to help track transactions. Still, without a full crypto law, builders and investors are reading signals. Exchanges are too. Officials reportedly worry that a formal framework could make crypto look legitimate and eventually systemic. I’ll be honest: that fear explains a lot of the delay.
What this means
India’s containment model is blunt: crypto can exist, but only under pressure. Coinbase returning anyway says major exchanges still think India is worth the trouble. Is that bullish? Yes, but not cleanly. It says users are there. It does not say policy risk has gone away. For Coinbase (COIN), the bet is that India’s market is large enough to justify years of friction. For Bitcoin (BTC), Ethereum (ETH), and the wider crypto market, India remains both an opportunity and a drag. Both things can be true.
Investors should watch the RBI first. Yes, this sounds too central-bank obsessed after a Coinbase-heavy story, but bear with me. If the RBI softens, or if India moves toward a real VDA law with licensing and user protection, trading volumes could rise quickly. Coinbase and other exchanges would have a clearer route into the market, and crypto assets could benefit from more Indian participation. If uncertainty drags on, or if India moves closer to a ban, adoption could stall. The next useful signals are specific: government statements, RBI comments, FIU action against offshore platforms, and Coinbase’s next moves in the market.