US-based crypto trading firm, Coinbase, has temporarily shut down the option to buy cryptocurrencies via the Unified Payments Interface (UPI) option. This development comes within days of announcing its launch in India with too much enthusiasm and fanfare. Coinbase is, therefore, halting its operations in just three days of its announced plans to launch crypto trading in India. The company, Coinbase, has, however, decided not to comment on the matter.
The Nasdaq-listed company announced on April 7 that it would allow its users to use UPI to buy cryptocurrencies in a mega event. The same night, the National Payments Corporation of India issued a statement to Coinbase saying that it is ‘not aware of any crypto exchange using UPI.’
Currently, the Coinbase app shows that users can sell cryptocurrencies using the IMPS method. The buying of cryptocurrencies option was unavailable at that moment. Notably, Mobiwik wallet, which has partnered with all the major crypto exchanges, has stopped supporting any such crypto trading. It has allowed only a few exchanges for crypto trading via bank transfers. An industry source said, “Altogether, the trading volumes have significantly dropped.” This is a major setback to the crypto industry, which was already witnessing a slowdown in India after the government passed some harsh rules of a 30% tax on gains from cryptocurrencies. The source continued, “Only the well-funded exchanges will survive in the next few months because volumes have dropped significantly which is the key revenue stream.”
It was earlier reported by Moneycontrol that transaction volumes have plunged by 55%, while the traffic has dropped by 40% on the top cryptocurrency exchanges in just two days after the new crypto rules came into effect on April 1. And then, several Nasdaq-listed crypto exchanges come foraying into the Indian markets when the trading volumes are at their lowest. Currently, NPCI holds the stand that UPI does not support crypto purchases.
However, in another statement, Coinbase clarified, “We are aware of the recent statement published by NPCI regarding the use of UPI by cryptocurrency exchanges. We are committed to working with NPCI and other relevant authorities to ensure we are aligned with local expectations and industry norms.”
At the launch event on April 7, a Coinbase executive said, “As we enter the Indian market, we are actively experimenting with the number of payment methods and partners to enable our customers to seamlessly make their crypto purchases. One of these methods is UPI, a simple to use and rapid payment system.”
Coinbase’s India tech hub employs 300 full-time employees, and the company plans to hire over 1,000 people in the country this year. Coinbase Ventures, the company’s venture capital arm, has already invested $150 million in home-grown Indian technology companies in the crypto and Web3 space and is currently exploring other opportunities to help Indian founders scale, the company said.