The National Payments Corporation of India (NPCI) – an umbrella organization in charge of operating retail payments and settlement systems in India – has made a decision not to place a ban on crypto trading in India, leaving it to banks to make that choice according to their various inclinations.
This public revelation is necessary because it further iterates the financial authorities’ stance on crypto-related transactions within the country especially since banks are blocking transactions affiliated with cryptocurrency exchanges.
Indian investors make cryptocurrency payments using Unified Payment Interface (UPI) and RuPay cards. A decision by the NPCI to block the above-mentioned payment portals would cut across all banks and that would restrict investors in the area of Crypto trading, making it impossible to sell off existing assets or acquiring more.
Sometime in April 2018, the Reserve Bank of India put out circular banning banks and finance firms within the country from providing services to customers dealing with digital currencies – a circular which was set aside by a ruling by the Supreme Court of India in March 2020.
Unfortunately, most banks in India, working in accordance with the defunct circular, have instructed payment gateway establishments to block transactions involving cryptocurrency merchants.
Customers of such banks that have blocked crypto trading are unable to make payments on exchanges using UPI, net banking, or even bank cards as noted by an industry official while speaking to Economic Times.
Speaking on this apparent confusion, Nischal Shetty, Indian software developer and CEO of WazirX – an Indian Bitcoin exchange – tweeted, “Confusion in India’s banking system is hurting 1.5 CRORE Indians in Crypto.” He further noted, “The Honourable Supreme Court of India has set aside RBI crypto circular of 2018. Banks in India still cite that circular to deny banking.”
As a resolution of the matter, Shetty stated, “I request banks in India to update their compliance team about the Supreme Court ruling that set aside the RBI circular against Crypto.”
According to a Reuters report, two months ago the Indian authorities had planned to ban all crypto-related activities within the country – this meant criminalizing the possession, mining, issuance, or trading of digital assets. A senior government official revealed the development to Reuters, adding that penalty would be a fine for culprits.
If the Indian government had gone through with the proposed bill, it would have been one of the strictest legislation on cryptocurrencies the world over especially seeing as other countries are moving to adopt digital assets. Some of India’s Asian neighbors like Thailand and Japan have enacted favorable laws within their respective jurisdictions with regard to Bitcoin and other virtual assets in general, regulating crypto to an extent.
The Vietnamese government, also, recently commissioned a crypto research group with plans to adopt and regulate virtual assets.