The Indian government’s approach towards the cryptocurrency industry has been ambiguous. First, they imposed a 30% tax on digital assets, and then they made things even harder for crypto enthusiasts. The National Payments Corporation of India [NPCI] indirectly suspended the use of the Unified Payments Interface [UPI]. However, a crypto advocacy group in India is pushing for the restoration of UPI access for crypto exchanges. This certainly rekindles hope in the industry.
Recently, it has come to light that the Indian government and the central bank have been receiving proposals advocating for the restoration of access to UPI for cryptocurrency exchanges. These proposals highlight the importance of facilitating smooth and regulated transactions between crypto exchanges and banking channels.
In November 2022, India established the Bharat Web3 Association [BWA], an advocacy committee responsible for overseeing the cryptocurrency and Web3 industry. Recently, the BWA has presented two proposals to the government. It is anticipated that a third proposal will be submitted in the upcoming weeks.
How popular is UPI in India?
The COVID-19 pandemic brought digitalization to the forefront, and during this time, UPI emerged as a prominent medium of transaction throughout India. According to data from the NPCI, the payment system processed a staggering 83 billion transactions during the fiscal year 2022-2023. These transactions amounted to a total value of $1.85 trillion. In the month of March alone, UPI facilitated 8.7 billion transactions worth $187 billion.
Additionally, these figures highlight the significant role UPI plays in the Indian payment ecosystem. It can be noted that its growing adoption is a preferred method of digital transactions.
Furthermore, the “shadow ban” on crypto exchanges using UPI was instigated by Coinbase’s entry into India. Back in April 2022, the NPCI tweeted that it was “not aware of any crypto exchange using UPI.” This even caused the Brian Armstrong-led exchange to step away. However, with the recent efforts to restore UPI access for crypto exchanges and the renewed interest in incorporating UPI into the crypto ecosystem, it is possible that more exchanges may consider entering the Indian market.