In its official launch event in India on April 7, the Nasdaq-listed company had announced that it would allow users to use UPI and that it had begun testing UPI payments in India several weeks ago. However, users in India are now being told that the UPI payment option is "currently unavailable" when attempting to purchase any token listed on the Coinbase app.
Surojit Chatterjee, chief product officer, Coinbase, had explained at the launch that using UPI would be the first step for people in India who wanted to buy cryptocurrency on the platform. However, on the same night, the NPCI issued a statement, “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.”
The NPCI's announcement reveals why other crypto exchanges in India have struggled to offer UPI. While cryptocurrency is not illegal in India, the Reserve Bank of India (RBI) maintains that virtual digital assets should be scrutinised more thoroughly. Although the Supreme Court of India invalidated the RBI's initial ban on cryptocurrency more than two years ago, banks continue to back the central bank. The NPCI's statement suggests that UPI is still a no-go for crypto in India, at least for now.
In response to the NPCI statement, a Coinbase representative stated on Friday, April 8, “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.”
“We are aware of the recent statement published by the NPCI regarding the use of UPI by cryptocurrency exchanges,” the statement said. “We are committed to working with NPCI and other relevant authorities to ensure that we are aligned with local expectations and industry norms.”
The Coinbase app, however, currently shows that the buying option is unavailable, even though users can sell using the IMPS method. Although the app encourages users to try another payment method, it does not support any other method for purchases in the country, according to users, testing, and the company's own support page.
Coinbase's debut in India came at a crucial time when domestic cryptocurrency exchange volumes plummeted in the first week of April following the announcement of a new tax regime that taxes crypto gains at 30 percent. While India's financial institutions appear to be warming up to cryptocurrencies, they are still playing hard to get.
While it is unclear whether Coinbase or UPI itself has disabled the UPI services, Coinbase has declined to comment on this latest development.
(The writer is founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist)
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