Turmoil hit India’s crypto traders after United Payments Interface, a central bank-backed entity said it was “not aware” of any crypto exchange using the network. Just hours earlier Coinbase Global’s chief product officer Surojit Chatterjee said crypto investors would now be able to use the country’s online retail payments system to transfer funds to its local exchange. At least seven crypto firms have suspended rupee deposits with Crypto exchanges already under pressure from the Indian tax regime.
Coinbase customers are back to not being able to fund their accounts with rupees, putting a serious dent to its expansion plans in India.
“We are committed to working with NPCI and other relevant authorities to ensure we are aligned with local expectations and industry norms,” a spokesperson for Coinbase said in a statement to Bloomberg on April 11, referring to the National Payments Corporation of India, which operates UPI.
NPCI is an initiative by the central bank and the Indian Banks’ Association. It is an umbrella organization for retail payments and settlements in India.
The moves hit trading and also inflows into Coin Sets, a mutual fund-like crypto product the Y Combinator-backed startup Mudrex offers, fell by roughly half in the previous two to three days.
“While exchanges around the world are innovating on Web 3.0, Indian exchanges are busy finding the next payment provider,” Subburaj of Giottus said.
Since the United Payments Interface announcement, at least four other companies that provide crypto-related trading services have either suspended rupee deposits or seen banks and payment gateways pull support for money transfers onto their platforms, according to executives at the firms and local media reports. Two other exchanges had lost support for rupee deposits from a payment service provider before the incident Bloomberg reported.
Crypto is already facing heavy headwinds, India is adding a new tax on all crypto transactions above a certain size that will take effect on July 1. The government this month introduced a 30% levy on income from digital asset investments.
Daily trading volumes on Indian crypto exchanges have fallen by between 88% and 96% since peaking last year, data from CoinGecko show. WazirX, India’s biggest crypto bourse, saw volumes drop 93% from an October high, according to the data.
It looks like back to the drawing board for Coinbase. Currently crypto positions on an exchange can still withdraw their fiat currency. Coinbase already offer trading in crypto pairs in India, which doesn’t require customers to deposit rupees into their accounts.
Industry Support Withdrawn
“After the Coinbase announcement, whoever was providing support to the industry has withdrawn support,” said Vikram Subburaj, chief executive officer of crypto exchange Giottus, in an April 12 interview. Giottus’s payment gateway stopped working with it, he said, declining to name the company. Trading volume on the platform plunged about 70% as a result, Subburaj said.via Bloomberg
BuyUcoin has also halted payments via UPI after the notice from NPCI, said co-founder Atulya Bhatt.
CoinSwitch Kuber, a Bengaluru-based cryptocurrency exchange, temporarily halted accepting rupee deposits via UPI and other banking channels on April 12.
MobiKwik, a local payment service provider, stopped working with Indian crypto exchanges on April 1, according to Moneycontrol. WazirX and CoinDCX, another Indian crypto exchange, announced that rupee deposits via MobiKwik have been temporarily suspended.
The TradersCommunity News Desk