India has been consistently staggering under stringent and rigorous policies related to crypto. These policies can be called as effective as a “shadow ban”.

Blows one after the other have caused the crypto community to live in a state of constant fear. The recent development is a sudden curb on accepting UPI payments to sell or buy the asset.

Payment aggregators have therefore maintained a safe distance from cryptocurrency exchanges and transactions related to the same, which are in line with the guidelines issued by the Reserve Bank Of India (RBI).

The Indian Government is yet to lay out clear directives regarding the stance of UPI payments to trade this digital asset. It is the vague verbal instructions that have seemed to keep the Payments Council Of India on its toes.

Payment aggregators, networks and banks are licensed by the RBI. Knowing the RBI’s concerns about cryptocurrencies and the fact that there is no underlying assets backing these crypto currencies’ valuations, all the networks, banks and payment aggregators in India are staying away from powering cryptocurrency exchanges, said Vishwesh Patel, the Chairman of Payments Council Of India. 

Adding to the same he also mentioned that PCI is not working with these exchange platforms and also that they do not support these transactions.

According to Patel, many cryptocurrency exchanges are working to address the payment issues at the earliest. Some of these exchanges are in communication with many banks to ensure a seamless P2P experience for their investors who trade on these platforms.

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Many exchanges put up pseudo companies and names to use payment services. However, it’s high time the Indian government clarifies its stand and bring out a clear, comprehensive legislation on the legality of cryptocurrencies and the rules governing exchanges, quoted Vishwesh Patel.

It is a matter of concern that a lot of illegal exchanges have started to mushroom in the country, who have then abused these payment services. It could be a matter of thought that perhaps the RBI wanted to put a check on such practices and therefore pushed for a UPI ban. This has, however, affected trader sentiments heavily. Trading volume in India has reduced considerably over the past few months.

Besides the major tax issues that have traders and investors in their grip, the UPI issue has been a huge deterrent for them. There could be some respite as a few exchanges have said that they would work with small to mid-sized lenders for deposits and payments. Some payment gateways are yet to stop accepting and processing these transactions.

MobiKwik, a prominent e-wallet in India has withdrawn its services related to cryptocurrency transactions and INR deposits continue to remain disabled on the application until further notice.

It is however unlikely that a formal notice regarding the UPI issue will be passed anytime soon by the National Payments Corporation Of India.

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