Cryptocurrency Exchanges Disable Deposits Through State-Backed System, Raise Alarm

CoinSwitch Kuber and WazirX, the two major Indian crypto exchanges have disabled rupee deposits for buying cryptocurrencies using a widely-used state-backed transfer system

CoinSwitch's app on Wednesday barred its users to load deposits, while rival exchange WazirX said on Twitter that its UPI is not available. Image: Getty

New Delhi: CoinSwitch Kuber and WazirX, the two major Indian crypto exchanges have disabled rupee deposits for buying cryptocurrencies using a widely-used state-backed transfer system, according to a report by Reuters.

This move by the two exchanges have triggered subscribers to voice concern on social media platforms.

The report said that the decision follows a one-line statement by the National Payments Corporation of India (NPCI) last week as it mentioned that the corporation was unaware of any crypto exchange using its United Payments Interface (UPI) framework, which eases bank transfers.

CoinSwitch's app on Wednesday barred its users to load deposits, while rival exchange WazirX said on Twitter, "UPI is not available," adding that it had no estimated time to fix the issue with UPI deposits.

One Twitter user, Avijit Debnath, asked CoinSwitch on the social media platform, “You have closed the INR deposit without any information. At least let us know how long it will be closed.”

According to an industry source with direct knowledge of the matter said the decision by CoinSwitch to stop UPI acceptance resulted from "regulatory uncertainty" after the NPCI statement.

On February 1, Finance Minister Nirmala Sitharaman during Budget presentation announced to tax income from cryptocurrencies and other digital assets at 30 per cent, signalling that authorities accepted digital currencies, but uncertainty over regulation has weighed on the industry.

However, the government is yet to frame a law on cryptocurrency. It is still not clear whether the Centre wants to ban or regulate digital currency in the country.

The Reserve Bank of India (RBI) is in favour of banning cryptocurrency over its threat to financial stability, but a recent decision to tax income from them suggests acceptance by authorities.

In October, CoinSwitch said it had raised more than $260 million for a valuation of $1.9 billion, underscoring the rise in popularity of crypto trading. Though no official data is available on the size of the Indian crypto market, industry estimates suggest investors number from around 2 crore, with total holdings of about Rs 40,000 crore ($5.25 billion).

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