US-based crypto exchange Coinbase has had to halt the option on purchasing cryptocurrencies through the Unified Payments Interface (UPI), just three days after its announced its plans to launch crypto trading in India.
The Nasdaq-listed company had announced that it will allow users to use UPI in a mega event on April 7. The same night, the National Payments Corporation of India (NPCI) issued a statement saying it is 'not aware of any crypto exchange using UPI.'
Currently, the app shows that the users can sell via IMPS method. Buying option is unavailable at the moment.
Notably, Mobikwik wallet, which had partnered with major crypto exchanges, has stopped supporting crypto trading. Further, only a few exchanges are currently allowing crypto trading using bank transfers. "Altogether, the trading volumes have significantly dropped," said an industry source.
This has come as a major setback for the industry, which was already witnessing a slowdown in India after the imposition of a 30% tax on gains from cryptocurrencies.
"Only the well funded exchanges will survive in the next few months because volumes have dropped significantly which is the key revenue stream," the source added.
Moneycontrol had earlier reported that transaction volumes have plunged by 55 percent while domain traffic dropped by 40 percent on India's top cryptocurrency exchanges in the first two days after the crypto tax came into effect on April 1.
The foray of the Nasdaq-listed crypto exchange comes at a time when trading volumes are at the lowest.
Industry sources also told Moneycontrol that NPCI's stance is that UPI does not support crypto purchases.
However, Coinbase in a statement, 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."
Moneycontrol had earlier reported that the firm has engaged with the government at various levels although he did not reveal the nature of the discussions.
At the launch event, a company executive had also said, "As we enter the Indian market, we are actively experimenting with a 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."
Moneycontrol reached out to Coinbase with queries on the same, but the company declined to comment.
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