Indian authorities prohibited the Unified Payments Interface (UPI) from facilitating cryptocurrency transactions, and in response, multiple advocacy groups have submitted petitions urging them to reconsider this decision.
The public policy advice firm Black Dot has already submitted its proposal to entities such as the National Payments Corporation of India (NPCI), the Reserve Bank of India (RBI), and Jayant Sinha, the chair of the Standing Committee on Finance. The proposal from Black Dot emphasizes that the seamless user experience provided by UPI contributes to keeping transactions onshore, ensuring transparency and visibility for regulators and law enforcement.
Another group, the Bharat Web3 Association (BWA), a newly established crypto policy advocacy group in India, is expected to present its recommendation in the coming weeks.
UPI gained rapid adoption in India, particularly since the onset of the 2020 COVID pandemic. The payment infrastructure allowed customers to make payments by scanning a QR code linked to their bank account, with no fees imposed on businesses for accepting UPI payments.
The Indian crypto industry has faced various challenges, including high taxes, a cryptocurrency market downturn, and a previous shadow ban that led to the termination of banking services for cryptocurrency exchanges. UPI services were reportedly halted around the same period in 2022.
Since the suspension of UPI access, it is estimated that around 80% of digital asset transactions in India are now conducted between individuals.
The current crypto ban on UPI appears to have been triggered by Coinbase’s entry into the Indian market. Following its launch in India in April 2022, Coinbase executives praised the simplicity of trading on the platform’s app with payments facilitated through UPI.
However, the National Payments Corporation of India (NPCI), the governing body responsible for UPI, clarified via a tweet that it had no knowledge of any crypto exchange utilizing UPI.
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