Utilization of cryptocurrency to complete payments in India has been halted despite an announcement from Coinbase that they would begin accepting transfers from India’s United Payment Interface, emblematic of the uncharted territory for crypto within government policies and traditional banking sectors. Bloomberg Quint reporters Sidhartha Shukla & Suvashree Ghosh provide additional details:
Coinbase wasn’t the only one affected. Since its announcement, at least four other companies that provide crypto-related trading services have either suspended rupee deposits or seen banks and payment gateways pull support for money transfers onto their platforms, according to executives at the firms and local media reports. Two other exchanges had lost support for rupee deposits from a payment service provider before the incident.
The move by UPI is adding to additional pressure on crypto trading volumes within India, but customers are still able to convert cryptocurrency back to fiat currency:
Those actions put additional pressure on already falling trading volumes, exchange executives said. The industry is also bracing for a new tax on all crypto transactions above a certain size that will take effect on July 1. The government this month introduced a 30% levy on income from digital asset investments. Daily trading volumes on Indian crypto exchanges, which collectively cater to about 15 million people, has tumbled between 88% and 96% since peaking last year, data from CoinGecko show.
India’s crypto scenario underscores the fragile relationships between government, established banking providers, and upstart crypto platforms as all parties work to find paths forward in the changing environment.
Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group