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India’s apex body for Web3 companies Bharat Web3 Foundation and crypto exchanges have urged the Indian government and the Reserve Bank of India (RBI) to restore UPI access to exchanges.
The Indian government’s stance regarding crypto and Web3 remains vague. While they support blockchain and some Web3 developments, the authorities are primarily against cryptocurrencies that are based on blockchain. The tax burden and lack of payment support have become major challenges for the crypto community in India.
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Proposals to Restore UPI Access For Crypto Exchanges
The Indian government and the central bank RBI received proposals to restore the access to Unified Payments Interface (UPI) for crypto firms, including crypto exchanges in India. Two proposals have already been submitted.
A third proposal will be submitted by Bharat Web3 Association (BWA), the apex body leading Web3 companies in India. The proposal will seek to convince the government and RBI to restore UPI payments for Web3 companies, crypto firms, and exchanges.
The National Payments Corporation of India (NPCI) stopped UPI access after Coinbase India announced the acceptance of UPI and IMPS services for crypto trading in April 2022. The NPCI was not aware of it and later stopped UPI access for crypto exchanges.
The high taxes, lack of payments support, and a shadow ban on crypto led trading volume on Indian crypto exchanges such as WazirX and CoinDCX to fall over 70% last year.
According to BlackDot’s proposal, the UPI for crypto trading will help regulators and law enforcement to track these transactions. As India added crypto under the Prevention of Money Laundering Act, anti-money laundering rules will make compliant crypto exchanges eligible for UPI access.
Moreover, UPI access for crypto exchange will protect Indian investors from unforeseen events. While India seeks a global common regulating framework for the crypto industry, the government must resolve challenges faced by this burgeoning industry.
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