The National Payments Council of India (NPCI), the Indian payments body, refused to even acknowledge the launch of Coinbase (NASDAQ: COIN) trading services hours after Coinbase had announced its launch in India. Consequently, Coinbase suspended support for Unified Payments Interface (UPI), followed by MobiKwik wallet also withdrawing UPI payments for digital currency trading, paving an increasingly difficult road for digital currency traders in the country.
MobiKwik was a partner with at least six digital currency exchanges, which stopped offering the MobiKwik e-wallet option immediately. Only a few exchanges in India are now allowing digital currency trading to their users.
Currently, users are selling via the National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS) method, although the buying option is not available. UPI or any other payment wallet is also not available on any digital currency exchange. Depositing funds on WazirX, CoinDCX, and Coinbase is challenging because of the limited options. Most exchanges allow users to deposit funds only through net banking—with just a few banks supporting those transactions. At the time of writing, Axis Bank, HDFC Bank, Kotak Mahindra Bank, and other private banks are not supporting any digital currency transactions.
At the launch event on April 7, Coinbase CEO Brian Armstrong stated, “As we enter the Indian market, we are actively experimenting with a number of payment methods and partners to enable our customers to seamlessly make their crypto purchases. One of these methods is UPI, simple to use and rapid payment system.”
However, after the NPCI’s statement denying the launch of a new digital currency exchange using UPI payments, Coinbase clarified, “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.”
Seemingly a major setback for the industry, it was already impacted by the Indian government’s recent declaration of digital currency regulations, particularly a 30% tax on gains from digital currencies. India has since noticed a rapid decline in trading volumes, which showcased a drop of 72% on WazirX, 59% on ZebPay, 52% on CoinDCX, and 41% on BitBns. The transaction volumes have gone down by 10-30% on most digital currency exchanges since April 1.
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