coinbase boosts investment in india’s coindcx, valuing exchange at $2.45b

Coinbase Increases Investment in CoinDCX

Coinbase has bolstered its investment in Indian cryptocurrency exchange CoinDCX, resulting in a post-money valuation of $2.45 billion for the Indian firm. This move signifies the U.S.-based crypto giant’s confidence in India’s digital asset landscape, despite ongoing regulatory ambiguities.

Funding Details and Previous Investment

This investment represents an extension of CoinDCX’s prior funding round and is contingent upon receiving necessary regulatory approvals and fulfilling standard closing requirements, as stated by both companies on Wednesday. The specific investment amount and the extent of Coinbase’s ownership stake were not disclosed.

However, it was confirmed that this new funding has elevated CoinDCX’s valuation from $2.15 billion, which was established during its previous funding round in April 2022.

Coinbase’s Continued Support

CoinDCX has verified to TechCrunch that the latest financial injection constitutes a new capital investment directly from Coinbase. Coinbase initially invested in CoinDCX in 2020 and further supported the Indian exchange during its Series D funding round in 2022 through its venture capital division, Coinbase Ventures.

Recent Challenges and Acquisition Rumors

The funding arrives several months after CoinDCX experienced a security compromise in July, leading to the loss of approximately $44 million in assets. This occurred amidst earlier reports this year suggesting Coinbase was in the process of acquiring CoinDCX – assertions that were refuted by CoinDCX’s CEO at the time.

Strategic Importance of the Indian Market

Shan Aggarwal, Coinbase’s chief business officer, highlighted the significance of this investment in a blog post. He stated, “This investment expands our presence in the region, where we also have local operations and key partnerships.”

Aggarwal further emphasized, “These actions collectively demonstrate our firm belief that India and its neighboring countries will play a crucial role in shaping the future of the global onchain economy.”

Coinbase’s Re-entry into India

Coinbase resumed operations in India earlier this year after a hiatus of over a year, following registration with the country’s Financial Intelligence Unit. The U.S. exchange also holds an investment in CoinSwitch, another prominent Indian crypto platform.

Regulatory Landscape and Market Potential

India, with its vast population and exceeding one billion internet users, represents a significant market for U.S. technology companies. However, the crypto market in India remains relatively underdeveloped, partially due to regulatory uncertainty.

Contributing factors include the government’s 30% tax on digital asset gains and a 1% tax on each transaction. Furthermore, New Delhi mandates that offshore crypto exchanges register with its financial regulatory body.

Recently, 25 international platforms, including BingX, LBank, and CoinW, have faced government scrutiny for non-compliance with registration requirements and anti-money laundering regulations.

CoinDCX’s Market Position

Coinbase’s decision to increase its stake in CoinDCX to strengthen its Indian presence is strategically sound, given CoinDCX’s substantial local user base of over 20.4 million. In July, CoinDCX reported managing customer assets exceeding ₹100 billion (approximately $1.12 billion).

The exchange also reported annualized group revenue of ₹11.79 billion (around $133 million) and annualized transaction volumes totaling ₹13.7 trillion (roughly $154.6 billion) across its product offerings.

Expansion into MENA

Beyond India, CoinDCX has expanded its reach into the Middle East and North Africa (MENA) region through the acquisition of BitOasis last year. Coinbase may utilize this existing footprint to enhance its presence in MENA, a rapidly expanding crypto market.

Future Plans for CoinDCX

According to a statement released by CoinDCX, the newly acquired capital will be allocated to improving its products, fostering user growth, expanding into new geographic regions, and enhancing educational programs.

Synergies and Shared Vision

Sumit Gupta, co-founder and CEO of CoinDCX, stated, “We recognize significant synergies with Coinbase in developing a compliant and regulation-focused crypto ecosystem in India, MENA, and beyond.”