Coinbase Disables Crypto Buying Using UPI in India, Days After Launch

Key Insights:

• Coinbase has suspended UPI support in India.
• The move follows NPCI’s statement that it is not aware of any crypto exchange using UPI.
• Coinbase currently allows users to sell tokens via the IMPS method.

Crypto behemoth Coinbase now says the Unified Payments Interface (UPI) option for buying cryptos is “unavailable” in India. The suspension of UPI arrives just days after the Coinbase set foot in India through a one-day investment event.

Coinbase said during its launch in India that it has added UPI (Unified Payment Interface), a payment system for money transfers, for buying cryptocurrencies such as Bitcoin and Ethereum.

However, Indians attempting to purchase crypto tokens from the Coinbase app are informed that the UPI payment method option is “currently unavailable.” 

“Purchases with this payment method are temporarily unavailable.”

The exchange said that currently, users could sell tokens via the Immediate Payment Service (IMPS) method. Buying cryptocurrency option is unavailable at the moment.

Regulatory Scrutiny In-Place

The immediate suspension of UPI payments follows a strange statement from the National Payments Corporation of India (NPCI), the governing body that oversees UPI, that read,

“National Payments Corporation of India would like to clarify that we are not aware of any crypto 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

Per a source familiar with the matter, Coinbase had contacted the UPI operator, seeking clarity on its statement, which was released hours after the exchange announced its India launch. According to a local media report,

“It means little as clearly cryptocurrency is not a legal tender in India. A regulatory body like the NPCI will not approve it unless it is officially legal.”

Additionally, the source mentioned that regulatory uncertainty in India has also triggered crypto exchanges using UPI through payment aggregators. These are the third-party responsible for managing and processing merchants’ online transactions. The person added,

“Payment aggregators are partnering with exchanges and are operating through multiple merchant IDs (MID). Informally, they have been told about the current regulations, but there is business interest for them to process these payments for crypto.”

In response to the NPCI post, a Coinbase spokesperson said Friday that the company would comply with regulators and their work will be aligned with their rules.

“We are aware of the recent statement published by the NPCI regarding the use of UPI by cryptocurrency exchanges. We are committed to working with NPCI and other relevant authorities to ensure that we are aligned with local expectations and industry norms.”

Coinbase has been heavily recruiting in India, over the last six months, despite the government announcing “stringent” cryptocurrency tax regulations last month.

Kapil Jain of BSV Blockchain Association told CoinGeek,

“They [Coinbase] were heavily recruiting for the past six months. Compliance will be a beauty to watch in India. Coinbase won’t be able to get away by saying buzz words.”

This Isn’t New

However, the move comes as a disappointment to crypto users across the nation; it doesn’t seem to surprise them. This is because the government recently cut-off digital currency usage due to AML rules. Binance’s WazirX exchange is already under tax raids and scrutiny.

Coinbase disabled UPI service in India few days after NPCI statement.

This is not new, Indian exchanges have also been facing payment service problem since 2018.

Weird fact – Actual gambling apps get proper payment service support while crypto exchanges are being alienated.

— Aditya Singh (@CryptooAdy) April 10, 2022

The Indian government has not banned digital currencies and has recently enacted a 30% tax on crypto trading. However, the Reserve Bank of India maintains a tough stance toward crypto regulations. The central bank’s deputy governor T. Rabi Sankar has compared crypto to Ponzi schemes and suggested a complete ban.