BENGALURU: When Surojit Chatterjee walking on stage coinbase At the Global Inc. conference in Bengaluru, India, on April 7th, he had no reason to expect the results to come soon. Chatterjee, the company’s chief product officer, told the gathered audience that crypto Investors will now be able to use the country’s online retail payment system to transfer funds to their local exchanges.
Hours after Chatterjee’s announcement, the central bank-backed entity running the system – called United Payments Interface – said it was “not aware” of any crypto exchanges using the network. Within three days of the incident, Coinbase had blocked the transfer of rupees to its trading app via is i,
The sudden reversal left Coinbase customers with the rupee in their accounts without funding, jeopardizing its expansion plans in India. “We are committed to working with the NPCI and other relevant authorities to ensure that we are aligned with local expectations and industry norms,” a Coinbase spokesperson said in a statement to Bloomberg on April 11. UPI.
Coinbase wasn’t the only one affected. Since its announcement, at least four other companies providing crypto-related trading services have either suspended rupee deposits or seen banks and payment gateways pull support for money transfers on their platforms, the firms said. And according to local media reports officials. Prior to the incident two other exchanges had lost support for depositing money from a payment service provider.
industry downturn
Exchange officials said those actions put additional pressure on already falling trading volumes. The industry is also gearing up for a new tax on all crypto transactions above a certain size which will be effective from July 1. The government this month introduced a 30% levy on income from digital asset investments.
Data from CoinGecko shows that daily trading volumes on Indian crypto exchanges, which collectively cater to around 15 million people, have fallen between 88% and 96% since peaking last year. According to the data, India’s largest crypto exchange WazirX saw a decline of 93 percent from its October high.
Investors who cash in crypto positions on an exchange can still withdraw their fiat currency. Coinbase already offers trading in crypto pairs in India, which does not require customers to deposit rupees into their accounts.
“Following the announcement from Coinbase, whoever was providing support to the industry has withdrawn support,” said Vikram Subburaj, chief executive officer of crypto exchange Giotas, in an interview on April 12. Refusing to name the company, he said that Giottus’ payment gateway has stopped working with it. Subburaj said this resulted in a nearly 70% drop in trading volume on the platform.
Co-founder Atulya Bhatt said local rival BuyUcoin has also stopped payments through UPI following a notice from NPCI.
uncomfortable relationship
NPCI, an initiative of the central bank and Indian Banks’ Association, is an umbrella organization for retail payments and settlements in a country of 1.4 billion people. It did not respond to requests for comment.
Coinswitch Kuber, a Bengaluru-based cryptocurrency exchange, temporarily stopped accepting rupee deposits through UPI and other banking channels, The Economic Times reported on April 12. CoinSwitch did not respond to an emailed request for comment.
Crypto-trading firms in India have had an uneasy relationship with banks and payment service providers since 2018, when the central bank issued a directive to lenders to stop working with digital asset companies. While the Supreme Court reversed that directive in 2020, some banks were hesitant to work with the crypto sector – partly because top officials were reserve Bank of India Public calls for a ban on cryptocurrencies have continued.
As a result of the vigilance of the traditional banking sector, payment gateways such as Juspay and MobiKwik have become an important link between crypto exchanges and customers wishing to deposit fiat currency. Without their cooperation, investors are limited to using methods such as transferring funds to the current accounts of exchanges, a time-consuming manual process prone to errors. Coinbase does not offer that option in India.
peer to peer
Investors can also engage in peer-to-peer trading, where fiat transfers are handled directly between counterparties, although this represents a small segment of the market in India.
A payments service provider stopped working with crypto exchanges last year after banks were asked to do so, its CEO said, asking that he and his company not be named because of the sensitivity of the issue. .
According to a report by news outlet Moneycontrol, local payment service provider MobiKwik stopped working with Indian crypto exchanges on April 1. MobiKwik declined to comment. WazirX and CoinDCX, another Indian crypto exchange, have both announced that rupee deposits through MobiKwik have been temporarily suspended.
singled out
Restricting payment access without a legal basis to do so is unfairly alienating the digital assets industry, said Jaideep Reddy, an attorney at Nishith Desai Associates with expertise in technology.
“If a bank denies service to a crypto business, there must be a valid reason other than the mere fact that it is a crypto business,” Reddy said. “Banks should be transparent, as account holders also have a charter of rights which includes transparency from the service provider.”
Edul Patel, co-founder and CEO of algorithmic crypto trading firm Mudrex, said that payment gateways in India began to withdraw support following the Coinbase episode. The same happened with Mudrex, Patel said in an interview on April 12, refusing to name his partner.
The moves didn’t just affect trading, he said: Inflows into CoinSet, a mutual fund-like crypto product the Y Combinator-backed startup offers, fell nearly half in the past two to three days.
“While exchanges around the world are innovating on Web 3.0, Indian exchanges are busy finding the next payment provider,” said Subburaj of Jiotus.
Hours after Chatterjee’s announcement, the central bank-backed entity running the system – called United Payments Interface – said it was “not aware” of any crypto exchanges using the network. Within three days of the incident, Coinbase had blocked the transfer of rupees to its trading app via is i,
The sudden reversal left Coinbase customers with the rupee in their accounts without funding, jeopardizing its expansion plans in India. “We are committed to working with the NPCI and other relevant authorities to ensure that we are aligned with local expectations and industry norms,” a Coinbase spokesperson said in a statement to Bloomberg on April 11. UPI.
Coinbase wasn’t the only one affected. Since its announcement, at least four other companies providing crypto-related trading services have either suspended rupee deposits or seen banks and payment gateways pull support for money transfers on their platforms, the firms said. And according to local media reports officials. Prior to the incident two other exchanges had lost support for depositing money from a payment service provider.
industry downturn
Exchange officials said those actions put additional pressure on already falling trading volumes. The industry is also gearing up for a new tax on all crypto transactions above a certain size which will be effective from July 1. The government this month introduced a 30% levy on income from digital asset investments.
Data from CoinGecko shows that daily trading volumes on Indian crypto exchanges, which collectively cater to around 15 million people, have fallen between 88% and 96% since peaking last year. According to the data, India’s largest crypto exchange WazirX saw a decline of 93 percent from its October high.
Investors who cash in crypto positions on an exchange can still withdraw their fiat currency. Coinbase already offers trading in crypto pairs in India, which does not require customers to deposit rupees into their accounts.
“Following the announcement from Coinbase, whoever was providing support to the industry has withdrawn support,” said Vikram Subburaj, chief executive officer of crypto exchange Giotas, in an interview on April 12. Refusing to name the company, he said that Giottus’ payment gateway has stopped working with it. Subburaj said this resulted in a nearly 70% drop in trading volume on the platform.
Co-founder Atulya Bhatt said local rival BuyUcoin has also stopped payments through UPI following a notice from NPCI.
uncomfortable relationship
NPCI, an initiative of the central bank and Indian Banks’ Association, is an umbrella organization for retail payments and settlements in a country of 1.4 billion people. It did not respond to requests for comment.
Coinswitch Kuber, a Bengaluru-based cryptocurrency exchange, temporarily stopped accepting rupee deposits through UPI and other banking channels, The Economic Times reported on April 12. CoinSwitch did not respond to an emailed request for comment.
Crypto-trading firms in India have had an uneasy relationship with banks and payment service providers since 2018, when the central bank issued a directive to lenders to stop working with digital asset companies. While the Supreme Court reversed that directive in 2020, some banks were hesitant to work with the crypto sector – partly because top officials were reserve Bank of India Public calls for a ban on cryptocurrencies have continued.
As a result of the vigilance of the traditional banking sector, payment gateways such as Juspay and MobiKwik have become an important link between crypto exchanges and customers wishing to deposit fiat currency. Without their cooperation, investors are limited to using methods such as transferring funds to the current accounts of exchanges, a time-consuming manual process prone to errors. Coinbase does not offer that option in India.
peer to peer
Investors can also engage in peer-to-peer trading, where fiat transfers are handled directly between counterparties, although this represents a small segment of the market in India.
A payments service provider stopped working with crypto exchanges last year after banks were asked to do so, its CEO said, asking that he and his company not be named because of the sensitivity of the issue. .
According to a report by news outlet Moneycontrol, local payment service provider MobiKwik stopped working with Indian crypto exchanges on April 1. MobiKwik declined to comment. WazirX and CoinDCX, another Indian crypto exchange, have both announced that rupee deposits through MobiKwik have been temporarily suspended.
singled out
Restricting payment access without a legal basis to do so is unfairly alienating the digital assets industry, said Jaideep Reddy, an attorney at Nishith Desai Associates with expertise in technology.
“If a bank denies service to a crypto business, there must be a valid reason other than the mere fact that it is a crypto business,” Reddy said. “Banks should be transparent, as account holders also have a charter of rights which includes transparency from the service provider.”
Edul Patel, co-founder and CEO of algorithmic crypto trading firm Mudrex, said that payment gateways in India began to withdraw support following the Coinbase episode. The same happened with Mudrex, Patel said in an interview on April 12, refusing to name his partner.
The moves didn’t just affect trading, he said: Inflows into CoinSet, a mutual fund-like crypto product the Y Combinator-backed startup offers, fell nearly half in the past two to three days.
“While exchanges around the world are innovating on Web 3.0, Indian exchanges are busy finding the next payment provider,” said Subburaj of Jiotus.