The world’s largest cryptocurrency exchange Coinbase has had the taste of India’s unfriendly environment for digital tokens.
On April 10, the US-based crypto platform suspended the option to purchase cryptocurrencies through India’s widely-adopted instrument for digital payments, Unified Payments Interface (UPI), on its app in India. This comes merely four days after adding UPI support to Coinbase’s trading services in the country.
Coinbase, however, continues to support immediate payment service (IMPS) to sell tokens.
Why is Coinbase facing the heat?
Coinbase’s April 7 announcement caught the attention of the National Payments Corporation of India (NPCI), a digital payments regulatory body.
In India, cryptocurrency exchanges have faced issues with payments after the Reserve Bank of India (RBI), in 2018, restricted banks from facilitating such trade. While the ban was overruled by the supreme court two years later, banks are still unwilling to process cryptocurrency-related transactions.
MobiKwik, the only digital payments aggregator to support crypto transactions, also stopped it following NPCI’s statement. Only a few exchanges now use bank transfers, Moneycontrol reported.
“There is an understated rule for payment aggregators to avoid crypto exchanges, even after the new taxation regime was announced. All our members are pretty much avoiding powering exchanges,” Vishwas Patel, chairman of the Payments Council of India, told The Economic Times newspaper.
These exchanges, according to Patel, have been nimble with using their IDs, changing them deftly as and when an older one gets blocked.
Coinbase’s long-term plan in India
Coinbase ventured into India around the time its regressive tax structure came into effect on April 1. The proposed 1% TDS, along with a flat 30% tax on income from crypto and other virtual digital assets, is likely to impede the popularity of virtual tokens.
However, Coinbase has a two-decade horizon. It has invested $150 million in two unicorn crypto exchanges—CoinSwitch and CoinDCX—through its investment arm Coinbase Ventures.
“We have just started our experiment. Our commitment is long-term. It is going to be a long journey. We want to be humble, respectful, and bring the technology in a trustworthy way,” Surojit Chatterjee, chief product officer at Coinbase, had said on April 7.
The company had been experimenting with a UPI rollout for a few users. Its CEO Brian Armstrong had said it plans to hire 1,000 people in India this year, in addition to the 300 full-time ones already employed.