Key Takeaways
- BACC wrote a letter to NPCI requesting a meeting to discuss and understand concerns around crypto trade in India
- Earlier in April, NPCI has clarified that it is not aware of any crypto exchange using UPI
The Blockchain and Crypto Assets Council (BACC) has urged the National Payments Corporation of India (NPCI) to restore the UPI(Unified Payments Interface) service to Indian crypto exchanges.
BACC’s participants including CoinSwitch Kuber, WazirX, and CoinDCX, have written to the NPCI requesting a meeting with the inter-bank retail payments and settlements body to discuss and understand its concerns around the crypto business and trade. NPCI is a wing of the Reserve Bank of India (RBI).
According to reports, BACC, in its letter, asked NPCI to grant UPI services to crypto exchanges that strictly adhere to KYC and other NPCI protocols. The letter comes against the backdrop of NPCI denying the use of UPI on crypto firms in India after leading US-based crypto exchange Coinbase launched operations, especially via UPI, in April 2022.
NPCI stated that it “is not aware of any crypto exchange using UPI”. This has caused US-based crypto trading firm Coinbase to halt UPI payments within three days of its launch. Since NPCI’s announcement, at least four other companies that provide crypto-related trading services have either suspended rupee deposits or seen banks and payment gateways pull support for money transfers onto their platforms. Two other exchanges had lost support for rupee deposits from a payment service provider before the incident. NPCI’s clarification regarding its stance on UPI payments for crypto firms also forced mobile payment company MobiKwik to stop offering UPI payment options to crypto businesses.
The denial of UPI service to crypto exchange is largely considered a move to limit Indian investors’ exposure to digital assets until a crypto regulation bill is adopted by parliament. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, remains yet to be tabled by the government. The Bill seeks to prohibit all private cryptocurrencies in the country but “allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,”
India has recently levied a 30% tax on crypto investors and a 1% TDS on every crypto intra-traders. Currently, Cryptocurrencies in India are taxed but not regulated or legalized. This atmosphere in India has forced many foreign crypto trading firms to think twice before entering the Indian Market.
