Cryptocurrency exchange Coinbase has announced that it is launching full-scale crypto trading in India with Unified Payments Interface (UPI) support. However, moments later, the National Payments Corporation of India (NPCI), which developed UPI, stated that no crypto exchange is using the UPI system.
Coinbase launches in India, hit by UPI issue
Nasdaq-listed cryptocurrency exchange Coinbase announced at an event in Bengaluru on Thursday that its trading platform will be fully available to retail traders in India.
The company said that customers will be able to buy cryptocurrencies on Coinbase using the Unified Payments Interface (UPI), the most widely used payment method in India. Coinbase began testing UPI payments a few weeks ago. However, the company did not disclose the names of its banking partners for UPI payments.
UPI, a real-time instant payment system developed by the National Payments Corporation of India (NPCI), accounts for 60% of retail payment traffic in the country. The NPCI, an apex organization for the operation of retail payment and settlement systems in India, is an initiative of India’s central bank, the Reserve Bank of India (RBI) and the Association of Indian Banks (IBA) .
Shortly after Coinbase’s announcement, the NCPI issued a statement emphasizing that it is unaware of any cryptocurrency exchange using the UPI payment system. The NPCI wrote:
With reference to some recent media reports regarding the purchase of cryptocurrencies using UPI, the National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI.
In May last year, amid talks of the Indian government possibly outlawing cryptocurrency, the NPCI said it will not ban crypto transactions on the UPI system, advising banks to make their own decision on whether to allow the use of UPI through their platforms. However, most banks in India are reluctant to work with crypto exchanges.
The Indian government is currently working on the country’s crypto policy. However, it now taxes cryptocurrency income at 30% with no loss compensation or allowed deduction. Since the new tax rules came into force on April 1, India’s cryptocurrency trading volumes have dropped significantly. On July 1, a 1% withholding tax (TDS) will be imposed on crypto transactions.
Brian Armstrong, the CEO of Coinbase, acknowledged the regulatory challenge in India while speaking at the event. “We know it’s not going to be a straight shot to bring this technology. We don’t know exactly how it’s going to evolve,” he stressed, adding:
We are committed to working with banking partners, regulators and most importantly the people of India as they have shown a real interest in cryptocurrency and there is a real desire to access some of these services and products.
“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,” Coinbase told Tech Crunch Thursday.
On Monday, Armstrong announced his company’s plan for India, focused on crypto and Web3. The plan also includes hiring more than 1,000 people for Coinbase’s Indian hub. The Nasdaq-listed company is an investor in a few Indian crypto exchanges: Coinswitch Kuber and Coindcx.
