An Indian cryptocurrency exchange and a public policy firm have separately approached the Indian government, urging them to reinstate access to the national Unified Payments Interface (UPI) for crypto firms. This comes after UPI access for the crypto industry was seemingly suspended in 2022.
According to sources familiar with the matter, the Indian government and the central bank have received proposals requesting the restoration of UPI access for the crypto industry.
Indian crypto stakeholders have made their first major attempt to seek policy changes. They address challenges like high taxes, a crypto winter, and a banking ban on digital assets exchanges. UPI services were seemingly suspended around the same time last year.
The Bharat Web3 Association (BWA), a newly formed crypto policy advocacy group, plans to submit a third proposal in the coming weeks. The proposals, though uncoordinated, demonstrate the industry’s determination to seek favorable policy changes.
UPI adoption in India has soared during the pandemic, with approximately 74 billion transactions worth $1.5 trillion conducted in 2022. UPI enables citizens to make payments for various goods using a QR code linked to their bank account. Merchants find the system attractive as they incur no charges for accepting UPI payments.
The trigger for the UPI access crisis appeared to be the launch of Coinbase in India. Shortly following the commencement, the National Payments Corporation of India (NPCI). Which oversees UPI, publicly stating that it was unaware of any digital asset exchange using UPI.
Seeking Policy Changes for India’s Crypto Industry
An unidentified Indian crypto exchange submitted a proposal to the NPCI requesting the removal of UPI access restrictions. The exchange emphasized the new anti-money laundering rules that made crypto firms responsible for monitoring suspicious financial activities. Industry participants are divided on the impact of these rules, with some viewing it as positive regulation.
Black Dot, a public policy advisory firm, also proposed to multiple authorities, including the NPCI and the Reserve Bank of India. The firm argued that UPI’s seamless user experience ensures onshore transactions, providing regulators with a visibility trail. They further highlighted that denying a specific class of investors access to UPI while allowing it for others may violate equality before the law.
The restoration of UPI access for exchanges is still uncertain. Nevertheless, if this action were to occur, it could significantly bolster the credibility of the crypto industry. Additionally, simplify the process for retailers to participate in trading.
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