TL;DR Breakdown
- Indian banks have written to the NPCI asking for clarification on UPI payments for cryptocurrency traders.
- The NPCI is yet to respond to the banks’ queries.
- Coinbase stops UPI payment three days after launch in India.
Recently, the National Payments Corporation of India (NPCI) countered the use of its Unified Payments Interface (UPI), an instant real-time payment system for bank transfers for cryptocurrency traders. Several Indian banks blocked UPI support for crypto traders with respect to the “verbal instructions” from NPCI.
Indian banks contest NPCI’s order
However, it appears several Indian banks are not in support of the restriction and are challenging NPCI’s decision. According to The Economic Times, Indian banks have contacted the NPCI about the unclear decision, asking for a formal order or clarification on using UPI for crypto transactions.
Despite the UPI payment system being introduced a few years ago, it became a popular payment tool for many cryptocurrency traders in India due to its easy, hassle-free nature. It’s believed that India would see mainstream adoption of crypto and decentralized finance if banks could support UPI payments for cryptocurrency transactions.
However, it’s unlikely that the NPCI would introduce a formal guideline on UPI crypto payment soon, but they have “no intentions of any circular.”
Coinbase suspends UPI payment
Leading cryptocurrency exchange, Coinbase was also affected by NPCI’s order. The exchange had to halt UPI payment support for users three days after it extended its trading services to the country. The firm stated that consumers would be able to buy cryptocurrencies through the exchange using their UPI account, which presently accounts for 60% of retail payment traffic in India.
Crypto traders in the country are frustrated by the NPCI’s decision, given that the two leading native exchanges, WazirX and ConSwitch Kuber, also had to suspend UPI support.
The government has gone back and forth with establishing a stance to inform the state of digital currencies and guide them to regulate their usage in the country. Back in April 2018, the central bank placed a blanket ban on cryptocurrency, which was eventually revoked by the Supreme Court in 2020 after many contentions from the crypto community.
