Indian central bank’s ‘informal pressure’ disrupted payments

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Just three days after debuting in the Indian market, United States-based crypto exchange Coinbase abruptly stopped using United Payments Interface (UPI), the most popular payment service in the region. Coinbase CEO Brian Armstrong later revealed that the service disruption was due to an “informal pressure” from India’s central bank.

During Coinbase’s 2022 Quarterly Earnings call, Armstrong spoke about the company’s global expansion plans while acknowledging Coinbase’s role in starting the conversation with regulators related to crypto adoption. When asked about the impact of the recent disruption related to offering payment services in India, Armstrong stated:

“So a few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India (RBI), which is kind of the Treasury equivalent there.”

While highlighting the Supreme Court’s ruling from March 2020, which forbids RBI from banning banks dealing with crypto business, Armstrong warned about certain government entities — including the RBI — “who don’t seem to be as positive on it.”

The CEO revealed Coinbase’s aggressive strategy for international expansion that involves launching services in new jurisdictions and working with the regulators based on their reactions to Coinbase’s presence in the region. Highlighting India’s attempt to impose a shadow ban on crypto businesses, Armstrong added:

“Basically they’re applying soft pressure behind the scenes to try to disable some of these payments which might be going through UPI. I guess we have a concern that they may be actually in violation of the Supreme Court ruling.”

Despite the evident regulatory hurdles, Coinbase prepares for a relaunch in the region by introducing other modes of payment as it tries to cater to the high demand of crypto investors. Armstrong concluded:

“In most places in the free world and in democracies, crypto is going to eventually be regulated and legal. […] And the way that we push the conversation forward is by taking action.”

On April 1, India introduced its first set of crypto laws that requires crypto investors to pay 30% tax on unrealized crypto gains. The move, however, negatively impacted the crypto ecosystem as trading volumes plummeted and in-house businesses shifted away into friendlier jurisdictions.

Eyeing the same pool of untapped market, crypto exchange Binance launched three key educational initiatives to fast-track the education of Indian investors and students about the cryptocurrency and blockchain ecosystem.

Along with the announcement, Binance highlighted that the lack of education among Indian regulators and policymakers currently hinders the widespread adoption of crypto.