India is now planning to let crypto investors use Unified Payments Interface (UPI) to purchase digital assets like cryptocurrencies and non-fungible tokens (NFTs). The financial authorities of India have been requested through multiple pleas, urging them to allow the integration of UPI for crypto transactions. These proposals have been sent by crypto advocacy group Bharat Web3 Association (BWA). It is evident that this topic is being brought up now at a time when India is heading the formulation of global crypto rules under its ongoing G20 Presidency. As a core part of these proposals to the Indian government, the crypto-advocacy group has pointed out that India’s crypto industry is being crushed under high tax pressure as an aftermath of last year’s crypto recession . The country’s shadow ban on the sector severed the ties of traditional banks with crypto exchanges, causing inconvenience to the investor community. The development, citing anonymous sources with expertise in the matter, was first reported by Coindesk.
The UPI (United Payments Interface) is a widely used instant online payment technology pioneered by India. Overseen by the NPCI, the UPI is an online payments mode in India, with over 300 million Indians have been using UPI to instantly transfer money from one account to another via apps such as BharatPe, Paytm, and Google Pay, among others. In August 2022, the company Coinbase announced that it was going to let Indian users purchase crypto on its app via UPI payments, though the National Payments Corporations of India (NPCI) did allow Coinbase to provide this feature. With one tap, the UPI system lets users make instant peer-to-peer payments from banks or digital wallets. The system was introduced in April 2016, a couple of months after Prime Minister Narendra Modi demonetised many currency notes in India as part of financial restructuring of the country’s economy. Throughout this time, India has very well adopted the UPI payment system with approximately 74 billion UPI transactions worth $1.5 trillion (roughly Rs. 1,23,56,962 crore) conducted in 2022 alone, as per Worldline’s report, India Digital Payments Annual Report for 2022.
“Our submission highlights that VDA (Virtual Digital Assets) service providers are now covered as ‘reporting entities’ under the PMLA (Prevention of Money Laundering Act) and are also registered with the FIU (Financial Intelligence Unit). We believe that these guardrails go a long way in helping secure VDA transactions and arresting malfeasance, if any,” the Coindesk report quoted the source. Therefore it is understandable that the Indian authorities are giving this a lot of thought before allowing UPI usage for crypto purchases, more so because the digital assets sector is largely unregulated and unstable, which could probably put the investors in a financial rut.