A new proposal is about to be submitted by the Indian State government to restore the use of the country’s Unified Payments Interface (UPI) for crypto exchanges operating in India, on top of two previous proposals.
The latest development comes after the supervising body for the real-time interbank payments network admitted in 2022 that it did not know that crypto exchanges were using the UPI service.
A Third Method Proposal
India’s Bharat Web3 Association (BWA), a cryptocurrency advocacy group formed in November 2022, will be the latest body to submit a proposal by the Indian government and the Reserve Bank of India (RBI) regarding UPI access in the country for crypto exchanges. Two entities have already made similar proposals, with the BWA expected to arrive in a few weeks.
The BWA was formed after the dissolution of the Blockchain and Crypto Assets Council (BACC), an organization under the Internet and Mobile Association of India (IAMAI) which also called for the restoration of UPI for crypto firms in the country. According to IAMAI at the time, the dissolution of the advocacy group occurred as a result of the uncertain regulatory environment in India.
In April 2022, the National Payments Corporation of India (NPCI), a division of the RBI, said it was not aware of crypto exchanges using the UPI feature. The statement came hours after crypto exchange giant Coinbase announced support for UPI for cryptocurrency purchases. The NPCI statement also led CoinSwitch Kuber and WazirX to disable deposits in Indian rupees.
UPI, widely used in India, is a real-time interbank payment system that facilitates peer-to-peer (P2P) and peer-to-merchant (P2M) transactions. It was created by NCPI in 2016.
With two proposals on the ground and a third on the way, it remains to be seen whether the government will change its stance or keep the restrictions in place.
Crypto Adoption Continues to Rise in India
Meanwhile, cryptocurrency exchanges are still struggling with the country’s poor regulatory policies for the industry. After the introduction of 30% tax on digital asset transfer, and the 1% reduction in transaction tax at source (TDS), exchanges have lamented how the high tax has affected their growth.
In December 2022, BWA submitted recommendations to the Finance Ministry of India, part of which sought relief from unfriendly crypto taxation. However, the situation remains unchanged.
Despite the government’s stance on crypto, adoption in India continues to increase, with a recent report projecting that there will be over 156 million cryptocurrency users in the country by the end of 2023.
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