India’s Biggest Bitcoin Exchanges Suspend Deposits Via UPI

Two major Indian cryptocurrency exchanges CoinSwitch Kuber and WazirX have disabled the facility to deposit rupees via the payment system UPI due to regulatory uncertainty. Reuters reports this.

On 7 April, the American exchange Coinbase announced its entry into the Indian market. In a presentation, the company’s product director Surodjit Chatterjee described the use of UPI as the first step to buying digital assets on the platform.

The real-time mobile payments system was developed by the National Payments Corporation of India (NPCI) to simplify interbank transactions and is regulated by the Reserve Bank of India.

On the same day NPCI said it is “not aware of any cryptocurrency exchange using UPI”.

Statement by NPCI as on 7th April 2022. 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. Please see attached document pic.twitter.com/lGTcaSLKeC

— NPCI (@NPCI_NPCI) April 7, 2022

According to media reports, Coinbase has disabled support for UPI.

A industry source told Reuters that CoinSwitch decided to close the option for deposits via the system due to regulatory concerns after NPCI’s statement. Users can still withdraw funds for now.

WazirX also informed customers that “UPI is unavailable”. Like CoinSwitch, the exchange did not specify timelines for restoring the options. In its statement, WazirX noted that deposits via the payment network were disabled as far back as December.

On 1 April, the company announced the closure of this option “for an indefinite period” via the popular mobile app MobiKwik.

📢 Update on INR deposits via MobiKwik

Effective 1st April 2022, 8 PM IST, INR deposits via MobiKwik will be temporarily disabled until further notice. Meanwhile, we are working to bring more INR deposit options & request you to use Net Banking & P2P.

Thanks for your support 🙏

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) April 1, 2022

That day, India implemented a 30% tax on gains from cryptocurrency transactions. Earlier, the Finance Ministry noted that the introduction of taxation does not determine the legal status of digital assets — that remains the prerogative of the relevant legislation.

«Regulatory clarity is an urgent necessity. There are currently many conflicting signals about the regulatory regime, which leads to uncertainty,» said Abhishek Malhotra, founding partner of TMT Law Practice.

In recent years, statements by Indian authorities on cryptocurrency legislation have ranged from a total ban on digital currencies, including criminal liability, to possible regulation as assets.

Industry estimates put the number of investors in the country’s crypto market at between 15 million and 20 million, with total assets valued at around 400 billion rupees (~$5.25 billion).

CoinSwitch said that in 2021 its user base grew 14-fold and surpassed 14 million.