Indian crypto exchanges have stopped accepting rupee deposits through the Unified Payments Interface (UPI), which was widely used to make minimal investments. 100 in Virtual Digital Asset (VDA). Mint looks at ways investors can deposit money on crypto platforms:
What is the latest banking problem?
Crypto exchanges stopped allowing deposits via UPI after the National Payments Corporation of India (NPCI) last week said it was not aware of any digital asset platform using the service. This explanation comes from US-based Coinbase Inc. This was in response to the announcement of support for UPI payments. Subsequently, MobiKwik, whose services were used by major crypto exchanges, withdrew support from the exchanges. This is in contrast to earlier, when banks denied access, experts said. This time around, crypto exchanges have disabled deposits through UPI to ensure compliance with Indian laws and regulations, he pointed out.
Then how can Indians invest in crypto?
India’s largest exchange with over 15 million users, CoinSwitch Kuber has stopped all types of deposits, while WazirX with over 12 million users allows net banking only for payments of Rs. Another major player, CoinDCX, allows net banking through IMPS, NEFT and RTGS. However, users pointed to the ease of access on social media in terms of UPI deposits, which have now been lost. On CoinDCX, investors must deposit at least 3,000 through net banking, while only a few banks are supported on WazirX. Redemption and trading are working on all crypto exchanges through net banking.
see full image
Can exchanges be denied banking services?
The Reserve Bank of India (RBI)’s 2018 circular banning banking services for crypto business was quashed by the Supreme Court in 2020. The top court ruled that banks cannot deny services to crypto exchanges as they have the right to do business. But the RBI has often expressed its disquiet over cryptocurrencies, which has put lenders on alert.
How long will the problem last?
The issue is largely confined to UPI this time, unlike May last year, when banking channels were closed to businesses dealing in cryptocurrencies. The impact on investors is even worse as UPI became the backbone of crypto investment in India. According to industry insiders, crypto exchanges are in talks with payment providers and banks to find solutions. The support handle of CoinSwitch Kuber on Twitter said that deposits have been disabled to ensure compliance with all Indian laws.
What will be the impact on crypto exchanges?
Crypto exchanges earn fees on transactions. Trading volume on major exchanges has already fallen 50-70% since the beginning of April due to new taxation norms on crypto. There are apprehensions that shrinking payment options for rupee deposits could lead to a further drop in volumes by 50-70%, leading to a major fall in the revenues of such firms. There may be massive layoffs or cost-cutting in the industry. Therefore, drying up of new money coupled with fall in trading volumes is a major setback for the exchanges.