Cryptocurrency News

Cryptocurrency Investors, Here’s What You Need To Know About Transactions Through UPI

UPI use for cryptocurrency came under lens after global giant Coinbase launched its trading service in India.

The National Payments Corporation of India (NPCI) released a statement on April 7 saying that it was not aware of any cryptocurrency exchange functioning in India that allowed users to buy tokens using the Unified Payments Interface (UPI).

The statement from NPCI — the country’s governing body that supervises UPI — came hours after global cryptocurrency giant Coinbase launched its trading service in India with UPI support.

With the NPCI statement suggesting that UPI is still a no-go for crypto in India, Coinbase’s move to allow its users to utilise the facility to make rupee deposits for buying cryptocurrencies in India hit a roadblock.

The NPCI statement also explains why other Indian cryptocurrency exchanges have struggled to support UPI on their platforms. The Reserve Bank of India (RBI) maintains that virtual digital assets require more scrutiny. Though the Supreme Court overturned the RBI’s ban on cryptocurrency over two years ago, banks, for the most part, continue to support the central bank.

Coinbase, which began offering its trading services in India on Thursday, said it was using UPI, managed by NPCI.

In response to NPCI’s statement, Coinbase suspended support for UPI payments instrument on its app in India less than four days after launching the trading service. Users in India attempting to purchase any token listed on the Coinbase app were informed that the UPI payment method was unavailable.

While there is no law barring UPI from being used to purchase cryptocurrencies, organisations appear to want to avoid any regulatory wrangling over the matter.

Banks are also wary about collaborating with cryptocurrency sector firms. As a result, cryptocurrency exchanges can only offer a limited number of payment alternatives on their sites.

In India, cryptocurrencies are taxed at 30 per cent, but the government has refused to declare them legal, choosing instead to tax the industry while deciding how to regulate it.

Mobikwik, a fintech company that facilitated cryptocurrency purchases through its wallet, has also halted operations due to regulatory uncertainties. Mobikwik was one of India’s most popular e-wallets for cryptocurrency transactions.

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