According to reports, two major Indian cryptocurrency exchanges have halted deposits via a popular payment method, causing concern in a country where regulatory certainty is still lacking despite Bitcoin’s huge popularity.
News sources have revealed that Indian crypto exchanges WazirX and CoinSwitch Kuber have disabled rupee deposits using United Payment Interface (UPI) for the purpose of buying cryptocurrencies.
UPI is a real-time payment system widely used in India and regulated by the central bank. The total value of UPI transactions exceeded $1 trillion in the last fiscal year.
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In response to anxious users, both exchanges said they could continue to withdraw funds through the interface.
Coinswitch Kuber noted in a tweet:
“The UPI repository is currently disabled for all users, but we are working to restore it as soon as possible. Please be patient.
Financial stability concerns
India, the world’s second most populous country, has spent years drafting legislation regulating cryptocurrencies, with one measure approved by the central bank due to concerns over financial stability risks, but a recent decision to tax cryptocurrency income indicates approval from authorities.
Data from CoinGecko shows that India’s top three crypto exchanges completed around $140 million in trades in the past 24 hours.
Thursday’s actions follow a one-line statement last week by the National Payments Corporation of India, the operator of the state-backed UPI system that facilitates bank transfers, in which it said it n had no knowledge of its use by any cryptocurrency exchange.
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Indian crypto investors on the rise
In India, digital currency is extremely popular. Indian cryptocurrency investments have exploded in popularity over the past year, reaching a multi-billion dollar market. About 15-20 million people in the country own cryptocurrency.
However, legislative clarity is lacking in the country: India’s central bank earlier suggested banning cryptocurrency, despite lawmakers enacting a 30% tax on profits from digital assets in February.
Some sources said trading volume dropped precipitously as a result of the new regulations, with volume on WazirX, India’s largest exchange, dropping by 71%.
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Investors lamented their frustration on Twitter as the exchange did not accept payment gateways from the majority of major banks, including ICICI Bank and HDFC Bank.
“Without providing any information, you have disabled the INR deposit. At the very least let us know how long the shutdown will last,” Twitter user Avijit Debnath urged the exchange via the social media network.
CoinDCX, another large cryptocurrency exchange with over 10 million customers, also only accepted bank transfers but required a minimum deposit of $3,000.
CoinSwitch, which claims to have more than 15 million users, did not immediately respond to a request for comment from Reuters. Moreover, the NPCI did not respond either.
Featured image from Daily Express, chart from TradingView.com