The National Payment Commission of India (NPCI) has refused to put a stay on the crypto transaction via UPI transaction amid growing demand from the Indian banks. The Supreme court of India last year had overruled the RBI banking ban following which most of the Indian crypto exchanges integrated direct UPI payment option for customers for deposits 8nstead of buying crypto via stable coins.
Despite the Supreme Court verdict, many crypto users have complained about getting bank notices for crypto-related activities amid rumors of a possible blanket ban from the Indian government. The banks had approached NPCI for restricting direct UPI transactions, however, the committee has put the onus bank themselves to take the call based on their legal and compliance department advice.
Almost half a dozen banks have directed payment gateway operators to blacklist merchants involved in the trade of cryptocurrencies. These banks restrict customers from using online fund transfer methods such as net banking and UPI to trade cryptocurrencies.
A Sigh of Relief for Indian Crypto Exchanges and Traders
The bull season has seen an influx of millions of new crypto traders in India, at a time when the majority of crypto exchanges are facing several technical outages due to overwhelming trading activity, the refusal of banks to corporate with the exchanges had put an extra burden on these platforms. Many exchanges have reported a multi-fold increase in trading activity and the number of traders, and at a time when the pandemic is raging havoc on the country, failure to withdraw money from these platforms has added to the agony of many who are looking to withdraw funds for more important things.
The NPCI might have refused to put a stay on crypto transactions via UPI for the time being, however, the onus falls on the government to bring in more clarity around crypto-assets and even take actions against banks who are refusing to comply with a direct verdict from the Supreme Court of India.