The Indian central bank blocks payments to bitcoin exchanges through its Unified Payments Interface (UPI). Payment processors must deactivate the bank’s UPI for crypto businesses.
Indian cryptocurrency exchanges have challenges. SBI, India’s biggest lender, has banned crypto exchanges from receiving money through its UPI network. The bank has instructed payment processors to deactivate SBI UPI for crypto businesses.
Traders cannot acquire Bitcoin or any other cryptocurrency using UPI since the processors who manage transactions for exchanges cannot accept funds transferred for crypto purchases on their SBI accounts.
Unspoken Regulatory Position on Crypto
All bank account users could utilize UPI to send and receive money from their cell phones without inputting their bank account details or net banking credentials.
Several banks have recently restricted crypto-related money transactions. SBI’s latest move closed one of the last remaining payment options for crypto exchanges.
The decision has already affected WazirX, the country’s biggest crypto exchange, processing SBI’s instructions. Unless SBI changes its mind, payment processors may cease taking payments for other exchanges.
When contacted, WazirX chief executive Nischal Shetty said:
“We’re trying to discuss and put forward our points to SBI. WazirX follows KYC (know your customer) norms and AML (anti-money laundering) policies. Being the largest crypto exchange in India, millions of Indians are currently affected due to this move by SBI.”
Because UPI is banned, many WazirX traders use an e-wallet service. However, merchants prefer UPI over credit/debit cards, NEFT, and online banking due to wallet fees and transfer limitations. Following SBI’s decision, many banks may be hesitant to accept crypto merchants on UPI.
However, banks and payment gateways have detected the unspoken regulatory position on cryptos. Senior bankers said RBI officials had expressed concerns about cryptos in talks.
