Crypto investors in a fix as exchanges halt taking rupee deposits via UPI

The suspension has come as a major jolt for crypto investors in India as UPI has been one of the most preferred routes for deposits on crypto exchanges. Overall transaction value on UPI topped $1 trillion in the last financial year.

CoinSwitch completely stopped taking rupee deposits, including UPI and bank transfers such as NEFT, RTGS and IMPS. WazirX as of now only allows deposits via net banking and person-to-person (P2P) transfers.

Moreover, there were limited banking options available for rupee deposits via net banking on WazirX, which is the biggest exchange in India in terms of trading volume.

Investors vented their anger on Twitter as payment gateways of most major banks such as HDFC Bank and ICICI Bank were not supported on the exchange.

While there has been no official statement from exchanges, as per CoinSwitch Kuber’s support handle on Twitter, deposits have been disabled to ensure compliance with all the Indian laws and regulations.

On the other hand, WazirX while responding to a customer tweet said, “There is still uncertainty in the banking sector to provide services to the crypto industry.” WazirX and CoinSwitch have a combined user base of more than 27 million.

CoinDCX, another major crypto exchange with more than 10 million users, also only allowed bank transfers but required a minimum deposit of ₹3,000.

However, withdrawals were working fine on exchanges.

The recent issue with deposits came up after National Payments Corporation of India (NPCI) last week clarified that it was not aware of any crypto exchange using UPI.

The clarification was issued after the US-listed crypto exchange Coinbase Inc., while announcing its India entry said that it will allow its users to purchase crypto currencies through the UPI system.

According to industry insiders, exchanges have been talking to banks and payment providers about offering a fix to investors, who have already been grappling with higher taxation on crypto investments.

“Historically, all the banking issues faced by the crypto exchanges involved banks shutting down crypto, including the famous RBI circular of 2018. It is the first time banks seems to be proactively shutting down access,” said Ajeet Khurana, a crypto adviser and investor.

The crypto sector faced banking issues last May as some banks severed ties with them citing an informal guidance from the Reserve Bank of India to stay away from businesses dealing in cryptocurrencies.