Coinbase entering India will expand the domestic crypto market, say experts

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Crypto space in India is heating up. Binance, KuCoin and now Coinbase entering the country may corner a significant market share, but the domestic players don’t seem worried. Exchanges such as CoinSwitch, CoinDCX and Mudrex said more competition will only improve the quality of services and products.

Coinbase, with a market cap of nearly $50 billion on Nasdaq, is eyeing its comeback to India with its crypto trading services later this year. During its previous short stint in the country, the exchange had run into troubles with the banking regulator Reserve Bank of India (RBI) and UPI.

Ashish Singhal, Co-founder, CoinSwitch told Moneycontrol, “India, the world’s fastest-growing major economy, is home to an expanding base of retail and institutional investors. This presents a significant opportunity for global financial firms—especially in crypto, where interest is growing.”

“More competition, more products, lead to better products serving users. This is great for the crypto industry in India. That said, we believe India’s financial ecosystem operates within a distinct regulatory framework, evolving tax policies and frequent consumer facing challenges,” he added.

While the crypto market in India is still very nascent and lacks regulations, US President Donald Trump pro-crypto policies have started to shift sentiments, especially towards India, which accounts for nearly 11.8 percent of the world’s crypto developers.

Last week, speaking at Moneycontrol Global Summit, Sumit Gupta, Co-founder, CoinDCX said that not only will Indian crypto exchanges survive but also win as the intensifying competition from global peers would “create the market.”

Gupta said, “Let them set the field. But eventually, Indian domestic players 5-10 years down the line will have a dominant role to play in the system. I do believe that it's going to be a heavily regulated industry, eventually. And when regulations are there, then it's not easy to operate. Only the long-term seriously committed players essentially win the market.”

“If you look at the financial sector, which foreign company in India has been able to have a significant market presence? None. None of the foreign banks have survived in India. None of the fintech players like Revolut have been able to gain a significant presence in India. The only exception is a company like Google Pay which has some presence and that too because of a lot of India angle,” he added.

“What it takes to go from a small market to becoming a very large market is more players coming in and they come in when there is more clarity and that's exactly what we're seeing,” Edul Patel, Co-founder of Mudrex said.

Disrupting domestic exchanges

Analysts, however, have unanimously said that domestic exchanges would be on the backfoot with global players getting registered with the Financial Intelligence Unit – India. It would kill the domestic players, they said.

Sidharth Sogani, Founder of CREBACO, a crypto research firm and CEO of Blue Aster Capital, a crypto hedge fund said, “It is good that a large player like Coinbase is entering India. It will bring more liquidity into the market… India will be a very interesting market. Once we have a regulator, India will be a good market.”

“Most domestic exchanges source their crypto from overseas and have to pay a premium and also they keep a higher profit margin while selling crypto to Indian users. International larger exchanges like Coinbase reduce this cost, and make crypto cheaper for Indian users, as they have their own reserves,” he added. Sogani shared that most crypto tokens are trading at a 3-5 percent premium on Indian exchanges as compared to the global ones.

Kashif Raza, founder of Bitinning, believes the Indian exchanges still lack a level playing field against global counterparts amid lack of regulatory frameworks.

“FIU registration is just a starting point. In the interest of foreign exchanges and Indian exchanges, it would have been great to give clarity to foreign exchanges to set up offices in India after registering and provide them more clarity on taxation, GST and TDS,” he said.