Third proposal is in process
The Indian government and the Reserve Bank of India (RBI) may receive a proposal from the Bharat Web3 Association (BWA), a cryptocurrency advocacy group founded in November 2022, seeking access to the nation’s UPI for cryptocurrency exchanges. Similar proposals from two parties have already been submitted, and BWA’s is anticipated in a few weeks.
The Blockchain and Crypto Assets Council (BACC), a group affiliated with the Internet and Mobile Association of India (IAMAI) that also advocated for the reinstatement of UPI for cryptocurrency businesses in the nation, was disbanded after the formation of BWA. The dissolution of the advocacy group, according to the IAMAI at the time, was brought on by India’s ambiguous regulatory landscape.
A division of the RBI called the National Payments Corporation of India (NPCI) said in April 2022 that it was unaware that cryptocurrency exchanges were utilising the UPI capability. After bitcoin exchange firm Coinbase announced support for UPI for cryptocurrency purchases, the remark was made shortly after. BuyUcoin, CoinSwitch Kuber and WazirX likewise disabled deposits in Indian rupees as a result of the NPCI’s declaration.
A real-time interbank payment system called UPI, which is popular in India, enables peer-to-peer (P2P) and peer-to-merchant (P2M) transactions. It was created in 2016 by the NCPI. It is unclear whether the government will change its position or keep the current restrictions in place given that there are currently two proposals in place and a third is on the way.
India’s adoption of cryptocurrencies is soaring
Exchanges for cryptocurrencies are still battling the nation’s unfavourable regulatory practises. Exchanges have bemoaned how the high taxes have hampered their expansion since the implementation of the 30% tax on digital asset transfers and the 1% transaction tax deduction at source (TDS).
BWA sent suggestions to India’s Finance Ministry in December 2022, part of which asked for relief from unfavourable crypto taxation. The circumstance, however, has not changed. Despite the government’s stance on cryptocurrencies, usage is rising in India, with a recent report estimating that by the end of 2023, there may be over 156 million bitcoin users there.
