Crypto giant Coinbase now says the Unified Payments Interface (UPI) option for buying cryptocurrencies is "not available" in India. UPI's suspension comes just days after Coinbase set foot in India via a one-day investment event.
Coinbase said during its launch in India that it added UPI (Unified Payment Interface), a payment system for money transfers, to purchase cryptocurrencies such as Bitcoin and Ethereum.
However, Indians attempting to purchase crypto-ken from the Coinbase app are advised that the UPI payment method option is "currently unavailable".
"Purchases with this payment method are temporarily unavailable".
The exchange said that currently, users could sell tokens via the instant payment method (IMPS). The option to buy cryptocurrencies is not available at the moment.
Regulatory scrutiny in place
The immediate suspension of UPI payments follows a strange statement from the National Payments Corporation of India (NPCI), the governing body that oversees UPI, which reads:
"The National Payments Corporation of India would like to clarify that we are not aware of any cryptocurrency exchanges using UPI."
According to a source familiar with the matter, Coinbase reached out to operator UPI, seeking clarity on its statement, which was released hours after the exchange announced its launch in India. According to a local media report:
“It means little as cryptocurrency is clearly not a fiat currency in India. A regulatory body like the NPCI will not approve it unless it is officially legal ”.
Additionally, the source mentioned that regulatory uncertainty in India has also triggered cryptocurrency exchanges using UPI through payment aggregators. These are the third parties responsible for managing and processing merchants' online transactions. The person added:
“Payment aggregators are collaborating with exchanges and are operating across multiple merchant IDs (MIDs). Informally, they have been informed of the current regulations, but there is a commercial interest for them to process these payments for cryptocurrencies ”.
In response to NPCI's post, a Coinbase spokesperson said Friday that the company will comply with regulators and their work will be aligned with their rules.
“We are aware of the recent statement released by the NPCI regarding the use of UPI by cryptocurrency exchanges. We are committed to working with NPCI and other relevant authorities to ensure that we are aligned with local expectations and industry norms. "
Coinbase has been heavily recruited in India over the past six months, despite the government announcing "tough" cryptocurrency tax regulations last month.
Kapil Jain of the BSV Blockchain Association told CoinGeek:
“They [Coinbase] have been recruiting heavily for the past six months. Compliance will be a beauty to watch in India. Coinbase will not be able to get away with saying passwords ".
It is not a novelty
However, the move comes as a disappointment for crypto users nationwide; it doesn't seem to surprise them. This is because the government recently cut the use of digital currency due to the AML rules. Binance's WazirX exchange is already under raids and tax controls.
The Indian government has not banned digital currencies and recently enacted a 30% tax on cryptocurrency trading. However, the Reserve Bank of India holds a tough stance towards crypto regulations. Central bank deputy governor T. Rabi Sankar compared cryptocurrencies to Ponzi schemes and suggested a complete ban.