Two major cryptocurrency exchanges in India have reportedly halted deposits via a popular payment method, causing concern in a country where regulatory certainty is still lacking despite Bitcoin’s massive popularity.
News sources revealed that Indian crypto exchange WazirX and CoinSwitch Kuber have disabled rupee deposits using the United Payment Interface (UPI) for the purpose of buying cryptocurrency.
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 past fiscal year.
In response to worried users, the two exchanges stated that they can continue to withdraw funds through the interface.
Coinswitch Kuber noted in a tweet:
“UPI Deposit is currently disabled for all users, but we strive to get it back as quickly as possible. Please be patient.”
Concerns about financial stability
India, the world’s second most populous country, has spent years developing legislation regulating cryptocurrencies, with a measure passed by the central bank due to concerns about financial stability risks, yet the recent decision to introduce a tax on cryptocurrency income signals the approval of the authorities.
CoinGecko data shows that the three largest Indian cryptocurrency exchanges completed nearly $140 million in trades in the past 24 hours.
Thursday’s action follows a one-line statement last week by India’s National Payments Corporation, operator of the state-backed UPI system that facilitates bank transfers, in which it said it had no knowledge of its use by any cryptocurrency exchange.
BTC total market cap at $785.16 billion on the daily chart | Source: TradingView.com
Indian crypto investors on the rise
In India, digital currency is very popular. Indian cryptocurrency investments have exploded over the past year, growing into a multi-billion dollar market. About 15 to 20 million people own cryptocurrency.
However, there is a lack of legislative clarity in the country: India’s central bank earlier proposed banning cryptocurrency, despite the fact that lawmakers imposed a 30% tax on profits from digital assets in February.
Some sources said trading volume has fallen sharply in the wake of the new regulation, with trading volume on WazirX, India’s largest stock exchange, down 71%.
Investors expressed their frustration on Twitter, as the exchange did not accept payment gateways for the majority of major banks, including ICICI Bank and HDFC Bank.
“Without providing any information, I disabled the INR deposit. At least, inform us of the duration of the shutdown,” Twitter user Avijit Depnath urged the exchange via the social network.
CoinDCX, another large cryptocurrency exchange with more than 10 million clients, similarly 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 Reuters request for comment. Additionally, the NPCI also did not respond.
Featured image from Daily Express, chart from TradingView.com