India’s leading banks have asked the National Payments Corporation of India (NPCI) to issue a formal directive that explains the curbs on money transfers using the Unified Payments Interface (UPI) for trading in virtual digital assets.
See related article: Coinbase snafu sets the cat among the crypto pigeons in India
Fast facts
- Indian banks had recently received “verbal instructions” from NPCI to block UPI payments for cryptocurrency purchases, according to a report by the Economic Times of India.
- It is unlikely the NPCI will issue a formal communique on the issue, as an official from the umbrella organization cofounded by the Reserve Bank of India said there are “no intentions of any circular,” according to the ET report.
- Banks are also seeking clarity on whether the use of immediate payment service (IMPS), another payment method developed by NPCI, is allowed for cryptocurrency trades.
- Coinbase launched its services in India in early April, touting the support of the UPI payment method to buy cryptocurrencies.
- However, within days of the Coinbase debut, the NPCI said it was not aware the platform would be used for trading cryptocurrencies, triggering major Indian exchanges to suspend UPI payments.
- Amid the regulatory uncertainty, including a new tax on cryptocurrency earnings, exchange trade volumes have dropped sharply in the past few weeks.
See related article: India’s crypto exchanges switch to P2P, bank transfers