Days after Coinbase CEO Brian Armstrong declared that “India is a magical place,” the crypto powerhouse found out that the country can also be a tricky place to do business.
Coinbase suspended rupee-to-crypto transactions through India’s Unified Payments Interface just days post-launch, after the country’s real-time payments network essentially said the company wasn’t authorized to use it.
“We are not aware of any crypto exchange using UPI,” India’s National Payments Corporation, which operates the network, said in a tweet last week.
Coinbase said it was “committed to working” with the umbrella organization for retail payments and settlements in India “to ensure we are aligned with local expectations and industry norms,” a company spokesperson said. The company’s website now says only crypto-to-crypto transactions are offered in India.
It was a stunning fumble for the crypto company which has vowed to “scale globally.” Coinbase has been aggressively expanding in India. Its India tech hub, which launched last year, has more than 300 employees and the company said it expects to hire over 1,000 more this year.
Armstrong said its venture arm, Coinbase Ventures, has invested $150 million in Indian tech companies focused on crypto and Web3.
“India has built a robust identity and digital payments infrastructure and implemented it at rapid scale and speed,” Armstrong said in a blog post. “I believe crypto has a big future here. We’re excited to help build that future.”
But the Coinbase setback in India underlined the challenges faced by crypto companies looking to expand their reach globally, given the “different levels of maturity and perspectives around digital assets from country to country,” Logan Allin, managing partner of Fin Venture Capital, said.
Fintech companies have faced criticism for expanding to new jurisdictions without making sure that they are complying with regulations.
“Digital asset exchanges like Coinbase have continued to take the approach of asking for forgiveness versus permission, which is not a sustainable model for global scale,” Allin told Protocol.
In many cases, crypto companies find themselves dealing with countries that “have taken a cautious and conservative tone with very little prescription and regulatory clarity, which is causing further confusion and foot faults at the company level.”
One issue Coinbase may be facing is the time it takes to recruit local teams. The company has 22 openings in international operations, including several country heads and regional managing directors.
