Multiple cryptocurrency exchanges in India are shutting down rupee deposits mainly payments through the Unified Payments Interface (UPI) system which is the most widely used retail payment method.

This took place after a statement issued recently by the National Payments Commission of India (NPCI) regarding the usage of the UPI payments system in crypto exchanges. A set of rules that came into effect on April 1 also contributed to this move, in addition to the government's hostile policies on cryptocurrency capital gains.

The list of crypto exchanges including CoinDCX, and CoinSwtich Kuber has also joined to completely shut down all purchase options for Indian users. CoinDCX to top up in-app wallet using UPI and even IMPS took steps to disable. In CoinDCX bank transfer into the wallet, the option can be seen through which payment can be made. Also, UPI as a payment option has been shut down for the WazirX platform. The three crypto exchanges use Mobikwik as their UPI partner. Nasdaq listed crypto exchange Coinbase, which was recently launched in India, has also disabled crypto purchases due to an ongoing issue regarding the UPI system.

On 7th April Coinbase had a launch event where the company confirmed the same. On 10th April it shut down all purchase options including the UPI. Users of Coinbase can only sell their holdings. As per reports released on 26th March, the Coinbase mobile app has now added support for two payment systems which are UPI and IMPS for Indian users. Coin switch Kuber which was a major cryptocurrency trading platform in India with over 15 million users also suspended all INR deposit services including UPI and bank transfers via NEFT, RTGS, and IMPS.  

In a statement, Coinbase said, “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.”

Despite its partnerships with major crypto exchanges, Mobikwik wallet no longer supports cryptocurrency trading. Additionally, only a few exchanges are currently allowing crypto trading using bank transfers. The fintech startup co-founder and CEO Bipin Preet Singh on stated 9th April, that Mobikwik had stopped offering the service for virtual digital assets, which include cryptocurrency.

Crypto trading volumes fall sharply in India after the 30% tax on crypto income went into effect without allowing loss offsets or deductions on April 1. Additionally, on 1st July introduced 1% tax deducted at source (TDS), will start levying on crypto transactions.

Indrani bose

CBW - External Analyst

INDIA