Coinbase, the world’s largest cryptocurrency exchange, has tasted India’s hostile environment for digital tokens.
As of April 10, the US-based crypto platform bans cryptocurrencies from being purchased on its Indian app using India’s most widely used instrument for digital payments, Unified Payments Interface (UPI). It came just four days after Coinbase added UPI support to its trading service in the country.
Despite this, Coinbase continues to support immediate payment service (IMPS) for selling tokens.
Why is Coinbase under fire?
National Payments Corporation of India (NPCI) noticed Coinbase’s April 7 announcement.
Since 2018, the Reserve Bank of India (RBI) restricted banks from facilitating cryptocurrency trade in India, causing cryptocurrency exchanges to have problems with payments. Even after the supreme court overturned the ban two years later, banks are still unwilling to process cryptocurrency transactions.
After NPCI’s announcement, MobiKwik, the only digital payments aggregator to support crypto transactions, also discontinued it. Moneycontrol reported less than a handful of exchanges send funds via banks now.
“There is an understated rule for payment aggregators to avoid crypto exchanges, even after the new taxation regime was announced. All our members are pretty much avoiding powering exchanges,” Payments Council of India chairman Viswas Patel told The Economic Times.
The exchanges, says Patel, are nimble in using their IDs, replacing an older one as soon as it is blocked.
The long-term plan of Coinbase for India
In April 2018, Coinbase made its first foray into India around the time India’s new regressive tax structure was implemented. There will be a 1% tax on TDS, as well as a flat 30% tax on income from crypto and other virtual digital assets, may hinder the popularity of virtual tokens.
Coinbase, on the other hand, has a two-decade horizon. Coinbase Ventures, its investment arm, has invested $150 million in two unicorn cryptocurrency exchanges: CoinSwitch and CoinDCX.
“We have just started our experiment. Our commitment is long-term. It is going to be a long journey. We want to be humble, respectful, and bring the technology in a trustworthy way,” said Surojit Chatterjee, chief product officer at Coinbase, on April 7.
A few users had been testing the UPI rollout. According to its CEO Brian Armstrong, it plans to hire 1,000 people in India this year in addition to the 300 full-time employees it already has.
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