Coinbase had to roll back UPI deposits because of criticism from regulators.
Cryptocurrency exchange, Coinbase had begun deposits in its wallets through the Unified Payments Interface (UPI).
Now it has suspended UPI, due to the regulatory heat it is receiving.
“Purchases with this payment method are temporarily unavailable,” Coinbase’s mobile application said on Sunday, reported Economic Times (ET).
“They (Coinbase) reached out to NPCI following the clarification. But it means little as clearly cryptocurrency is not a legal tender in India. A regulatory body like the NPCI will not approve it unless it is officially legal,” a person aware of the matter said, adding that the regulatory uncertainty had also led to crypto exchanges using UPI via payment aggregators.
On April 7, the National Payments Corporation of India (NPCI) announced that they are not aware of any crypto exchange using UPI.
“Payment aggregators are partnering with exchanges and are operating through multiple merchant IDs (MID). Informally, they have been told about the current regulations, but there is business interest for them to process these payments for crypto,” this person added.
“There is an understated rule for payment aggregators to avoid crypto exchanges, even after the new taxation regime was announced. All our (Payment Council of India) members are pretty much avoiding powering exchanges. Crypto exchanges are known to keep changing and using different merchant IDs at different points of time. Everything is a cat and mouse game, wherever they find that their ID is getting blocked they move on to another one. So, this thing is a continuous process. We have a dedicated team at CCAvenue that keeps checking the seven-eight exchanges that are there.”Vishwas Patel, Chairman of the Payments Council of India and founder of CCAvenue.
When ET last week asked Coinbase whether it was keeping banks and the NPCI in the dark by using multiple UPI handles, it said: “We have had a number of meaningful conversations with regulators and believe we are operating within all reasonable expectations. We are committed to working with NPCI and other relevant authorities to ensure we are aligned with local expectations and industry norms.”
Regulators in India are wary of crypto. The Government has a negative stance towards crypto. That’s why payment processing will remain a hassle for both exchanges and investors. Exchanges are forced to work with payment processors which raises the costs for investors.
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