The Payment System operator of India has said that it didn’t have any knowledge of cryptocurrency exchange using its services for their activities. Several major Crypto exchanges working in India have stopped the option to make fiat deposits through the United Payments Interface (UPI) in the regulatory uncertainty. The Crypto exchanges involved include WarirX, Coinbase, and CoinSwitch Kuber.
Authorities Believe Cryptocurrency Firms Are Not Using UPI
The United Payment System (UPI) is a payment system backed up by the state for bank transfers that Crypto exchanges use to deposit fiat. Although, from new developments, the National Payments Corporation of India (NPCI), which uses the UPI, declared that it didn’t know that Cryptocurrency Exchanges were using the payment system.
In line with the declaration of NPCI, Cryptocurrency exchanges stopped the option to deposit fiat and didn’t mention when they would restore the service. In a tweet, the biggest Crypto exchange in India, WazirX, said that “UPI is unavailable” and that a fix is not specific anytime soon. The Crypto exchange later released a statement that deposits made through the service have been non-functional since December 2021.
Coinbase Exchange Was Affected
Coinbase, the Crypto exchange that recently got operational in India, was also affected. Brian Armstrong, CEO of Coinbase, said: “India has shown a significant commitment with UPI during its launch announcement.”
Surojit Chatterjee, Coinbase’s chief product officer, added: “Through UPI, anyone can easily make digital payments on their mobile phones.” NPCI quickly saw the comments made by Coinbase on UPI and later denied that any Cryptocurrency exchange had used the state-backed payment network. This denial resulted in an uncertain regulation for the sector.
India’s central bank: the Reserve Bank of India, regulates the NPCI and, from time, has had a position against cryptocurrency. Going by the statement, an increased regulatory uncertainty is imminent within India’s cryptocurrency sector. The services of Coinbase in India are now non-functional, meaning that any deposit, conversion, or withdrawal of fiat cannot take place. Coinbase is still yet to explain the current situation to its users. Another Indian cryptocurrency exchange that Coinbase invested in is also affected.
Stakeholders Say Current Issues Are Connected India’s Anti-Crypto Stance
Industry Stakeholders have come out to say that the current situation didn’t surprise them. Based on information from an anonymous source, the Central Bank of India may be compelling payment providers to halt offering services to cryptocurrency exchanges.
Many believe that the decision of Coinbase to talk about UPI caused the current situation. However, because the Supreme court has overturned the RBI restrictions on banks that allow crypto transactions, people believe Coinbase has a right to discuss UPI.
This issue of regulatory uncertainty may impede the sector’s future growth as the Indian Crypto Industry is already faced with increased taxes. Based on earlier reports that the volume of transactions that generally take place on Indian crypto exchanges has dropped to its lowest level in a long time after India’s questionable tax rules on cryptocurrency took effect on April 1.