The Bharat Web3 Association (BWA) proposal underlines a persistent push to advocate for reinstating Unified Payments Interface (UPI) access for cryptocurrency exchanges in India. This move highlights the latest in a series of efforts to seek intervention from the government in ensuring the crypto sector’s viability within the national payments infrastructure.
Past UPI Proposals and the Pioneering Advocacy Groups
This proposition follows two preceding proposals submitted to the Indian State government, emphasizing the growing demand to reestablish UPI services for cryptocurrency exchanges operating within the country’s borders.
The BWA, a vocal champion for cryptocurrencies formed in November 2022, is set to be the newest entity to present its case to both the Indian government and the Reserve Bank of India (RBI).
The inception of BWA followed the dissolution of the Blockchain and Crypto Assets Council (BACC), a formerly operating body under the Internet and Mobile Association of India (IAMAI). The BACC also strived to restore UPI for crypto-related firms in India.
However, amidst the turbulence of India’s regulatory environment, the BACC was disbanded, leading to the emergence of the BWA as the new torchbearer for the cause.
Unawareness, Restrictions, and the Ripple Effect
This urge for action comes in the aftermath of a revealing announcement by the National Payments Corporation of India (NPCI), an extension of RBI, in April 2022.
In a surprising statement, the NPCI claimed ignorance about using the UPI service by cryptocurrency exchanges. This news broke shortly after Coinbase made public its decision to support UPI for cryptocurrency purchases.
The ripple effects of the NPCI’s declaration were quickly felt, leading CoinSwitch Kuber and WazirX to suspend deposits in Indian rupees.
However, despite the restrictions, cryptocurrency adoption in India continues to surge. An optimistic forecast suggests that the number of cryptocurrency users in India could exceed 156 million by the end of 2023.
The UPI, a significant facilitator of real-time interbank transactions in India, plays a crucial role in peer-to-peer (P2P) and peer-to-merchant (P2M) transactions. Established by the NCPI in 2016, its widespread use signifies the potential benefits of integrating crypto exchanges into this platform.
The Future of Crypto Exchanges Amid Regulatory Challenges
As the Indian government continues to uphold its stance, crypto exchanges must navigate a complex regulatory landscape. That includes a 30% tax on digital asset transfers and a 1% transaction tax deduction at source (TDS).
Despite these challenges, the crypto industry in India remains hopeful for a favorable turn of events. Even as crypto exchanges express concerns over the impact of these tax policies on their growth, their resilience is notable.
With three proposals now under consideration, the future of UPI access for crypto exchanges in India hangs in the balance. Whether the government will alter its current standpoint or maintain the existing limitations remains to be seen.
In the meantime, crypto exchanges persist in their quest for a more favorable regulatory environment, reflecting their unwavering commitment to driving the industry forward.
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