Coinbase Files with Indian Regulator for DCX Global Investment
US-based cryptocurrency company Coinbase has filed with India’s competition regulator, the Competition Commission of India (CCI), to obtain approval for acquiring a minority stake in DCX Global, the parent company of the Indian crypto exchange CoinDCX.
This filing was made in accordance with merger regulations, which mandate the disclosure of such transactions. The submission indicates that the proposed deal involves Coinbase purchasing a small shareholding in DCX. Although the financial details of this investment have not been publicly disclosed, Coinbase has stated in its filing that the transaction is not expected to raise any competition concerns within India's cryptocurrency market.
Coinbase, which is incorporated in the United States, operates cryptocurrency trading platforms in over 100 countries and has recently commenced operations in India. DCX, incorporated in Mauritius, holds the technology, branding, and intellectual property related to the CoinDCX exchange. The operation of the CoinDCX platform in India is managed by Neblio Technologies Pvt. Ltd.
This development follows CoinDCX's recent funding round, which valued the company at $2.45 billion. Coinbase had previously invested in CoinDCX in 2022, acquiring a 2.34% stake when the company was valued at approximately $2.15 billion. The specific amount invested in this new stake has not yet been revealed.
CoinDCX's Expansion Plans and Regulatory Review
CoinDCX has indicated that the recent funding will be instrumental in expanding its product offerings, developing new blockchain-based use cases tailored for Indian users, and supporting its global expansion initiatives. Last year, the company also expanded its reach into the West Asia and North Africa region through the acquisition of the crypto platform BitOasis.
For the purposes of regulatory assessment, Coinbase, DCX, and Neblio are considered the relevant parties in this transaction. The filing notes that while the CCI has the discretion to define market boundaries, the transaction can be reviewed within the broader market for cryptocurrency exchanges operating in India. Coinbase's position is that the proposed stake purchase will not adversely impact competition in this sector.
Coinbase's Return to the Indian Market
Coinbase had previously launched UPI-based cryptocurrency purchases in 2022 but suspended the service within days due to regulatory pressures, subsequently blocking UPI payments entirely and closing numerous inactive Indian accounts.
After an interval of nearly two years, the company is now re-entering the Indian market by registering with the Financial Intelligence Unit (FIU) to legally resume its trading services. Coinbase has stated its intention to relaunch retail trading later this year and introduce new products, although a specific date has not yet been announced.
The Financial Intelligence Unit (FIU) plays a crucial role in India's cryptocurrency regulatory framework. All cryptocurrency exchanges wishing to offer trading services legally in India are required to register with the FIU. The FIU is responsible for ensuring that all exchanges adhere to anti-money laundering (AML) and know-your-customer (KYC) regulations.
Beyond cryptocurrency trading, Coinbase is also focusing on expanding its involvement in blockchain development and security. Paul Grewal, Chief Legal Officer at Coinbase, met with Karnataka's IT Minister, Priyank Kharge, in Bengaluru to discuss potential collaborations in areas such as blockchain technology, cybersecurity, and developer training.
Discussions during the meeting included sharing tools, organizing hackathons, and supporting local developers. Coinbase also showcased its developer platform, designed to simplify on-chain development.
India has adopted a cautious yet evolving approach towards cryptocurrencies. While cryptocurrencies are not deemed illegal, the government has implemented regulations and tax rules to monitor trading activities and prevent their misuse.