Coinbase previously allowed crypto trading in India, with no requirement for clients to put rupees into their accounts
Surojit Chatterjee had no reason to foresee the backlash that would soon follow when he came on stage at a Coinbase Global Inc. conference in Bengaluru, India, on April 7. Chatterjee, the company’s chief product officer, informed the gathering audience that crypto investors will now be able to send cash to its local exchange using the country’s online retail payments system.
After Chatterjee’s revelation, the central bank-backed organization that manages the system, United Payments Interface, stated that it was “not aware” of any crypto exchanges utilizing the network. Coinbase has banned rupee transactions to its trading app via UPI within three days of the occurrence.
Coinbase was not the only company impacted. Since its statement, at least four additional companies offering crypto-related trading services have either ceased rupee deposits or had banks and payment gateways withdraw support for money transfers on their platforms, according to the companies. Officials, according to local media sources. Two other exchanges had lost functionality for depositing money from a payment service provider prior to the event.
These moves, according to exchange executives, put extra pressure on already declining trade volumes. The business is also prepared for a new tax on all crypto transactions over a particular threshold. Which will go into force on July 1. The government imposed a 30% tax on revenue from digital asset investments earlier this month. Data from CoinGecko suggest that daily trade volumes on Indian crypto exchanges, which serve around 15 million users, have dropped by 88 percent to 96 percent since peaking last year. According to the statistics, WazirX, India’s largest cryptocurrency market, saw volumes decline 93 percent from an October peak.
Vikram Subburaj, chief executive officer of crypto exchange Giottus, said: “After the Coinbase announcement, whoever was providing support to the industry has withdrawn support. Giottus’s payment gateway stopped working with it, he said, declining to name the company. Trading volume on the platform plunged about 70% as a result.”
Jaideep Reddy, a lawyer at Nishith Desai Associates for specializes in technology, added: “Restricting payment access without legal grounds for doing so adds up to unfairly singling out the digital asset industry. If a bank denies service to a crypto business, there has to be a valid reason other than the mere fact that it’s a crypto business. Banks have to be transparent, as account holders also have a charter of rights which includes transparency from the service provider.”
