Multiple Indian crypto exchanges have disabled rupee deposits using the Unified Payments Interface (UPI) system, which is the most widely used retail payment method. This comes after the National Payments Corporation of India (NPCI) said last week that it was unaware of any crypto exchange using UPI.
The Indian government has spent years working on a law to ban or regulate cryptocurrencies, with a ban backed by the central bank over risks to financial stability. However, recently the government has taken a decision to put a tax on the income from cryptocurrency and other digital assets.
Crypto exchange Wazirx is not offering UPI support. The exchange tweeted on Wednesday, “Currently, UPI is not available,” and advised users to do P2P payments instead, which have zero fees. The platform also added that it has no estimated time limit to address the issue with UPI deposits. Coindcx is also not supporting payments by UPI, saying on Twitter Monday, “UPI is temporarily unavailable.”
Coinswitch Kuber, with over 15 million users went one step ahead and reportedly suspended all INR deposit services, including UPI and bank transfers via NEFT, RTGS, and IMPS.
The Nasdaq-listed crypto exchange Coinbase, which recently launched in India, has also disabled all purchase options, including the UPI.
Last month, multiple reports suggested that Coinbase has begun rolling out UPI and IMPS support for its users in India after users noticed the inclusion of the two payment systems (UPI & IMPS) on Coinbase’s app. The company acknowledged the same at its launch event on 7th April.
“We are aware of the recent statement published by NPCI regarding the use of UPI by cryptocurrency exchanges. We are committed to working with NPCI and other relevant authorities to ensure we are aligned with local expectations and industry norms,” the exchange clarified.
An industry source with direct knowledge of the matter said the NPCI was caught between a rock and a hard place when Coinbase claimed to launch with UPI support. “Once the launch of Coinbase happened in India and they announced the usage of UPI as a payment option, NPCI realized it needed to put a clarification out there,” the person said.
Earlier this month, popular payment service Mobikwik also disabled offering services to crypto exchanges. Meanwhile, crypto exchanges have been declining in India after the 30% tax on crypto income went into effect without allowing loss offsets or deductions on April 1. From July 1st, a 1% tax deducted at source (TDS), will also be applicable on crypto transactions.
There are no official data available on the size of India's crypto market, but industry experts believe the number of investors ranges from 15 million to 20 million, with a holding of about Rs 40,000 crore ($5.25 billion).
