Coinbase had to suspend UPI payments on the platform within three days after the NPCI statement. Coinbase said that it is committed to following the regulatory rules.
Cryptocurrency exchange Coinbase has disabled the provision of buying digital assets using UPI payments in India. This decision comes only within three days of adding support for the popular Unified Payments Interface payment instrument.
Support for UPI Payments by Coinbase
On Sunday, April 10, Coinbase’s mobile application read that “purchases with this payment method are temporarily unavailable”. Coinbase said that it has temporarily suspended services after the company came under NPCI scrutiny for launching its services in India.
Coinbase officially started its crypto trading services in India last week despite strong regulations. At that time, the National Payments Corporation of India (NPCI) said that they were not aware of “any crypto exchange using UPI”. A person familiar with the matter told Economic Times:
“They (Coinbase) reached out to NPCI following the clarification. But it means little as clearly cryptocurrency is not a legal tender in India. A regulatory body like the NPCI will not approve it unless it is officially legal”.
The source also said that regulatory uncertainty has forced crypto exchanges to use UPI via payment aggregators. The source added:
“Payment aggregators are partnering with exchanges and are operating through multiple merchant IDs (MID). Informally, they have been told about the current regulations, but there is business interest for them to process these payments for crypto”.
As of now, the Coinbase app shows that users can sell via the IMPS method. The buying option remains unavailable at the moment.
Coinbase’s Expansion In India
Crypto exchange Coinbase sees India as a major market for its business. The company is willing to triple its headcount in India this year in 2022. Chief Executive Officer Brian Armstrong said that they will have 1000 employees by the end of this year.
“Last year we decided India is going to be a huge place. We understand the complexity of the Indian market. It’s a place with a lot of potential,” said Coinbase’s India head Pankaj Gupta.
However, there growing backlash against stricter regulations from the local crypto exchanges operating in India. The government has imposed 1% TDS on all crypto transactions above a certain size value.
“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. 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, a simple to use and rapid payment system,” explained Coinbase in its statement after NPCI’s clarification.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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