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Major crypto exchanges are unable to use UPI for fund deposits, leading to significant drop in trade volumes

Banks are still on the fence about working with crypto firms even after RBI’s ban was overturned.

Most major Indian crypto currency platforms are having issues with fund deposits, specifically through the Unified Payments Interface (UPI). In addition to the new taxation worries and existing regulatory uncertainty, the inability of users to conveniently deposit rupees has significantly hurt crypto trading and investment in the country. According to the Economic Times, trading volumes on crypto exchanges like WazirX, ZebPay and Giottus hit a six-month low on April 10.

Status of fund deposits on major platforms

As of April 13 afternoon, here’s the availability for INR deposit services on three of the largest platforms:

WazirX:

  • Available: 
    • Limited Net Banking – Support for 12 banks, none of the largest banks like SBI, HDFC, Axis, and Kotak Mahindra
    • WazirX P2P Users can buy USDT from those wishing to sell by directly transferring rupees to the bank account of the USDT holder. Then, USDT can be used to buy other cryptocurrencies on WazirX.
  • Not available: 
    • Net Banking (most banks)
    • Mobikwik wallet
    • UPI

CoinDCX: 

  • Available: 
    • Limited Net Banking – Support for 14 banks, none of the largest banks like SBI, HDFC, Axis, and Kotak Mahindra
    • Bank transfer through NEFT/RTGS and UPI by way of sharing the transaction ID
  • Not available: 
    • Net Banking (most banks)
    • Mobikwik wallet
    • UPI

CoinSwitch Kuber:

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  • Available: 
    • None
  • Not available: All forms of INR deposit services have been disabled including UPI, Mobikwik, NEFT/RTGS/IMPS, and Netbanking.

Events that led to platforms disabling UPI access

1. NPCI’s one-line statement:  Most of the platforms disabled the UPI deposit options after the National Payments Corporation of India last week released a one-line statement saying:

“With reference to some recent media reports around the purchase of Cryptocurrencies using UPI, National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI.(emphasis ours)

NPCI was prompted to issue this statement after Coinbase, which launched in India on April 7 to much fanfare, offered UPI as a payment option. Coinbase disabled the UPI deposit option within 3 days of NPCI’s statement.

2. Mobikwik cuts off service: Most crypto platforms were relying on Mobikwik for UPI deposits since banks refuse to directly work with crypto firms, Mobikwik last week reportedly cut off its services. The exact reason for the same is unknown, but Entrackr reported on April 11 that Mobikwik is facing significant challenges in getting a payment aggregator license and providing UPI services to crypto firms might be one of the reasons why. According to Economic Times, WazirX saw 65-90% of its business erode after Mobikwik disabled its services on the platform.

The relationship between banks and crypto firms has been on and off despite the Supreme Court in 2020 quashing the Reserve Bank of India’s April 2018 circular which barred banks from working with crypto-firms. While there is nothing legally preventing banks and UPI apps from working with crypto platforms, payment aggregators have remained hesitant due to regulatory uncertainty. There are also multiple unverified reports that the Reserve Bank of India has, behind the scenes, instructed payment aggregators to not work with crypto firms.

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