Coinswitch Kuber, one of the largest crypto exchanges in India, on April 13 temporarily disabled all rupee deposit services on its app via the Unified Payments Interface (UPI). It also disabled bank transfers through NEFT/RTGS/IMPS.
Among several speculations doing the round, the one being cited as the most probable reason behind the move seems to be the reported withdrawal by Kotak Mahindra, their leading banking support provider, from the arrangement between the two.
“Recently Coinswitch Kuber shifted their whole banking system to Kotak Mahindra and after NPCI incident, Kotak Mahindra withdrew their services from Coinswitch Kuber. Not intentionally Coinswitch has stopped their payment services,” a senior crypto industry member said on condition of anonymity.
On April 7, NPCI had put out a statement saying that they were not aware of any virtual digital asset exchange using UPI for transactions. “With reference to some recent media reports around the purchase of cryptocurrencies using UPI, National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI,” the statement read.
When Outlook Money reached out to the chief business officer, Sharan Nair (Coinswitch Kuber), he denied to comment on why they have disabled its services. He, however, added that they are in talks with several banks.
Outlook Money also reached out to Kotak Mahindra Bank for comments but received no response till the time of going to press.
Is Another Ban On Rupee-Crypto Transactions In The Offing?
While most exchanges have stopped the UPI facility, and recently MobiKwik reportedly withdrew its services to crypto exchanges, there is no clarity yet on whether this will lead to another round of ban on rupee-crypto transactions.
Purushottam Anand, an advocate and founder of Crypto Legal, a crypto law firm, believes that Crypto platforms are being denied access to banking services in a subtle, informal and unofficial manner.
“Though there is no official order, circular or any form of communication from the RBI, NPCI, or other authorities prohibiting banks and payment service providers to serve crypto platforms, it cannot be a coincidence that deposit methods of most crypto exchanges are reported to be affected. The RBI must issue a circular, on the lines of earlier circular dated May 31, 2021, and clarify that no bank or payment service provider is prohibited from providing services to crypto platforms,” he said.
The industry awaits clarification, but it may be too early to speculate on the matter.
Ajeet Khurana, a crypto advisor, says: “While several people have jumped to the conclusion that this is a shadow-ban, and it may be, I fear, there are other reasons. I don’t want to speculate on the matter. However, the only thing to keep in mind here is that no institution or corporation should take actions that are detrimental to Indian investors. All actions should be oriented towards investor protection. And that’s not what happened today.”
That said, the crypto market is in a midst of a lot of confusion.
“While the RBI wants to ban cryptos, some politicians don’t,” says Sandeep Shukla, a professor of Computer Science and Engineering at IIT-Kanpur, and co-director of the National Blockchain Project.
Prof. Shukla believes that a strong regulation is required for cryptocurrencies in India. “If not, these are better banned as they are like ponzi schemes,” he adds.