Indian Crypto exchanges have petitioned the National Payments Corporation of India (NPCI) to restore UPI services for crypto participants as part of the Blockchain and Crypto Assets Council (BACC). The Reserve Bank of India’s specialized section, the NPCI, is governed by the Ministry of Finance of the Government of India. The Reserve Bank of India established NPCI to manage India’s retail payment and settlement systems.
UPI is the flagship instant P2P, P2M, and inter-bank payment transfer system.
This comes two months after the National Payments Corporation of India (NPCI) rejected the usage of UPI for crypto platforms, and numerous payment companies stopped serving crypto exchanges.
As a result, most crypto exchanges in India have blocked deposits using UPI, drastically decreasing crypto adoption.
Major cryptocurrency exchanges, including CoinSwitch Kuber, WazirX, and CoinDCX, have written to the NPCI as Blockchain and Crypto Assets Council (BACC) members. In a letter, it has reportedly requested that the UPI regulating body reinstate UPI services for crypto players.
According to media reports, the platforms have requested a meeting with BACC to clarify the regulator’s worries over UPI usage for cryptocurrency trading.
“We asked for some time with the NPCI to understand their reservations and put forth our viewpoint to remove any misunderstanding,” the report stated. As a result, cryptocurrency exchanges have petitioned the National Payments Corporation of India (NPCI) to restore UPI services to crypto players who implement user KYC and fulfill NPCI-mandated protocol and customer due to diligence protocols.
It’s worth noting that controversy surrounding bitcoin trading and India’s position on the subject has surrounded the ecosystem from its inception. When the National Payments Corporation of India (NPCI) said in April that it was unaware of any cryptocurrency platform that used UPI, numerous payment providers discontinued their services to crypto exchanges, resulting in a drop in crypto volumes in the country.
The BACC is now willing to address the matter by calling a meeting and encouraging the NPCI to restore UPI services on its platforms two months later. This is a new initiative to remove the crypto ambiguity in the country.
The Crypto Platforms’ Regularity Debate
National Payments Corporation of India (NPCI) declared a blanket ban on the usage of UPI on crypto platforms in India after Coinbase, a US-based crypto exchange, began operations in April 2022, primarily using UPI. “With reference to some media reports around the purchase of cryptocurrencies using UPI, National Payments Corporation of India (NPCI) would like to clarify that we are not aware of any crypto exchange using UPI.” the regulatory had said.
After the remark, trade volumes on the markets fell by roughly 60% the following week. All major Indian crypto exchanges (including Coinbase) have disabled UPI deposits, and major Indian banks have stopped offering net banking services for cryptocurrency transactions.
The finance ministry, the RBI, and the government have been working to limit cryptocurrency reach until Parliament adopts the Crypto Bill.
The business is in chaos due to the RBI’s on-and-off approach, which included a previous ban on bitcoin that the Supreme Court ultimately reversed.
The current letter from BACC to NPCI aims to start a dialogue and dispel some of the myths preventing customers from adopting blockchain.
