Major crypto exchange has halted support for the Unified Payments Interface (UPI), India’s payment system, following a statement by the country watchdog that claimed it was not aware of “any crypto exchange using UPI.”
“Purchases with this payment method are temporarily unavailable,” Coinbase’s mobile application currently says when choosing the UPI method.
US-based Coinbase announced during an event on April 7 that it would allow Indian users to use the UPI as a payment method to buy and sell crypto, as per a report by Money Control.
However, the National Payments Council of India (NPCI), a division of the country’s central bank, released a statement saying that it was not aware of any crypto exchange that supported the UPI payment method.
“With reference to some recent media reports around the purchase of Cryptocurrencies using UPI, National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI,” NPCI tweeted.
UPI is an instant real-time payment system developed by NPCI to facilitate inter-bank transactions through mobile phones.
In a statement, a Coinbase spokesperson has reportedly acknowledged that they are aware of the statement by NPCI regarding the UPI, adding that they are committed to working with the country’s regulatory bodies to ensure they abide by the local expectations.
“As we enter the Indian market, we are actively experimenting with a number of payment methods and partners to enable our customers to seamlessly make their crypto purchases. One of these methods is UPI, a simple to use and rapid payment system,” it added.
As reported, Coinbase revealed its push into the Indian market last week, with CEO Brian Armstrong claiming that the exchange intends to hire over 1,000 people in the country by the end of the year.
However, experts warn the country’s increasing hostility toward the emerging cryptoasset sector could destabilize the crypto space in India.
More notably, Manhar Garegrat, executive director of policy at crypto exchange CoinDCX, argues that the 1% tax deduction at source (TDS) on all crypto transaction redemptions levy could force the liquidity out of the markets as high-frequency traders would have to dramatically reduce their trading in a bid to trim taxes.
“There will be no liquidity left in the markets,” Garegrat said. “Trades placed by buyers will not get executed as efficiently as they do today, and such inefficiency will eventually dwindle the whole ecosystem.”