A new proposal is about to the submitted to 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 claimed in 2022 that it was not aware that crypto exchanges were utilizing the UPI service.
A Third Proposal on the Way
India’s Bharat Web3 Association (BWA), a cryptocurrency advocacy group formed in November 2022, could be the latest body to submit a proposal to the Indian government and the Reserve Bank of India (RBI) regarding access to the country’s UPI for crypto exchanges. Two entities already made similar proposals, with BWA’s expected to come in a few weeks.
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 the IAMAI at the time, the disbandment of the advocacy group happened as a result of India’s uncertain regulatory environment.
In April 2022, the National Payments Corporation of India (NPCI), a division of the RBI, said it was not aware that crypto exchanges were using the UPI feature. The statement came hours after crypto exchange giant Coinbase announced support for UPI for cryptocurrency purchases. NPCI’s statement also led CoinSwitch Kuber and WazirX to disable deposits in Indian rupees.
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UPI, which is 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 developed by the NCPI in 2016.
With two proposals on the ground and a third on the way, it remains to be seen if the government will change its stance or maintain the restrictions in place.
Crypto Adoption Continues to Soar in India
Meanwhile, cryptocurrency exchanges still grapple with the country’s unfavorable regulatory policies for the industry. Following the introduction of the 30% tax on digital asset transfers, and the 1% transaction tax deduction at source (TDS), exchanges have lamented how the high taxes have affected their growth.
In December 2022, BWA submitted recommendations to India’s Finance Ministry, part of which sought relief from unfriendly crypto taxation. However, the situation remains unchanged.
Despite the government’s stance towards crypto, adoption in India continues to increase, with a recent report projecting that there could be over 156 million cryptocurrency users in the country by the end of 2023.
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