India: Crypto Connection Reportedly Cost Wallet Provider Its License

The Reserve Bank of India has rejected MobiKwik’s payment aggregator license due to its association with crypto platforms. 

The bank’s red light means MobiKwik will be unable to onboard new clients who offer the company’s Zaakpay as a payment gateway, and existing clients will have 180 days to stop using it.

Firm halted services without explanation

The firm abruptly halted its services to all crypto businesses at the start of April and refused to explain to the crypto platforms the reason why.

Business Today quoted the company’s Draft Red Herring Prospectus, which stated: “While our consumer payments and BNPL segments significantly rely on Zaakpay’s services for processing payments within the MobiKwik ecosystem… Accordingly, any disruption in the functioning of Zaakpay, even if caused due to factors completely external to us, can adversely affect the operations of our MobiKwik Wallet and BNPL products, including MobiKwik Zip, as well as our brand and reputation.”

RBI governor Shaktikanta Das previously told reporters, “Our position on cryptocurrency is very clear…Private cryptos are a huge threat to macroeconomic and financial stability.”

India working on CBDC

Instead, the finance ministry and the central bank have been working on a central bank digital currency (CBDC), a digital equivalent of the rupee.

In a recent interview, Polygon co-founder Sandeep Nailwal said: “The finance ministry should be the one heading this task force, and every other institution should be given a clear mandate that no crypto case shall be handled locally. It should only be handled by the central crypto task force.”

Polygon is a prominent crypto project that originated in India. However, owing to uncertainty regarding crypto legislation in the country, Nailwal and his team moved to Dubai two years ago. 

“But to expect each nodal member of each regulatory body to truly understand this new technology in their busy schedules is very difficult. Hence we need one single highly empowered division, which has a singular responsibility to interact, learn and enforce regulations on this fairly niche industry,” Nailwal added.