The Indian government and central bank have gotten proposals requesting the restoration of access to the Unified Payments
Interface (UPI) for the cryptocurrency industry, CoinDesk reports, citing sources familiar with the
matter. The proposals have been made
independently, with two already submitted and a third expected in the coming weeks
from the newly formed crypto policy advocacy group, the Bharat Web3 Association
(BWA).
These proposals mark the first
major effort by India’s crypto stakeholders to seek policy changes governing
the industry since it faced challenges such as harsh taxes, a crypto winter,
and a ‘shadow ban.’ The shadow ban resulted in
Indian payment processors severing banking access for crypto exchanges, and UPI
services were ostensibly suspended around the same time last year.
What is the UPI?
UPI is a revolutionary system that combines
the functionalities of multiple bank accounts into a single mobile application,
regardless of the participating bank. It seamlessly merges various banking
features, facilitates effortless fund routing, and enables convenient merchant
payments, all within a single platform. In essence, UPI consolidates and
streamlines diverse banking services, ensuring a comprehensive and
user-friendly experience for customers.
The UPI adoption in India has
experienced rapid growth, with approximately 74 billion UPI transactions worth
$1.5 trillion conducted in 2022. UPI allows citizens to make payments for
various goods and services using a QR code linked to their bank account.
Merchants are not charged any fees for accepting UPI payments, making it a
widely used system nationwide.
What Led to the Suspension of UPI Access?
The launch of Coinbase in India
seemed to have served as the catalyst for the suspension of UPI access for Indian cryptocurrency exchanges. On April 7, 2022,
Coinbase unveiled its operations in India, with company executives highlighting
the ease of trading on their app and utilizing UPI for payment processing.
However, the National Payments Corporation of India (NPCI), the regulatory body
overseeing UPI and operating under the supervision of the Reserve Bank of India
(RBI), swiftly responded to the event. Shortly after Coinbase’s announcement,
the NPCI took to Twitter to clarify that it had no knowledge of any crypto
exchange utilizing UPI services.
The Proposals
One of the proposals seeking
UPI access restoration was submitted by an unidentified Indian crypto exchange.
The exchange stated…
