Indian mobile wallet firm Mobikwik and international crypto exchange Coinbase have stopped offering UPI as a payment method for cryptocurrency transactions after the National Payments Corporation of India put out a statement saying that it was “not aware” of this happening, the Economic Times reported.
Entrackr has reached out to the NPCI, Coinbase and Mobikwik for comment.
Coinbase launched in India just last Thursday, and had offered UPI as a payment option, as had Mobikwik. The NPCI is not exactly a payments regulator, but it is a union of India’s major banks, both public and private, and holds a lot of sway in how UPI is used.
While there is nothing specifically prohibiting UPI being used to buy cryptocurrencies, firms appear to want to avoid any confrontation over the issue with regulators. Banks remain hesitant to be associated with crypto industry players as well.
“We are not aware of any crypto exchange using UPI,” the NPCI said in a brief statement on Thursday. The subtext to that statement may well be this: stop doing what you’re doing, and we won’t have to avoid the headache of figuring out whether to regulate crypto payments more than the government already has.
While Coinbase was still offering UPI as an option, it told TechCrunch last week that it was “committed” to working with regulators and the NPCI to resolve any issues. It’s unclear if the firm reached out to the NPCI after this statement, or if the payments body requested Coinbase and Mobikwik to halt UPI payments.
Cryptocurrencies are taxed at 30% in India, but the government has refused to say that they are legal anyway, preferring to tax the industry while it decides how to proceed (if at all) in regulating it. More recently, the government said that crypto investors wouldn’t be able to set off tax dues in crypto trading against losses, a stand that has angered the industry, which CoinDesk reported is considering approaching the Supreme Court.
Payments regulations are a significant hurdle for foreign firms expanding to India. When Uber launched in India, the Reserve Bank of India barred it from taking credit card payments without 2-factor authentication, a move that the ridesharing firm argued would make its service less convenient for users.
Established companies aren’t spared the uncertainty either: since the Reserve Bank of India tightened regulations on auto-renewing payments, firms that relied on credit card subscriptions have scrambled to adhere to new requirements; Apple warned developers that subscriptions through its payment systems may fail if developers didn’t encourage users to top up their Apple ID balance.