CoinSwitch limits access to all the payment options
What is Cryptocurrency?
Cryptocurrency is a relatively new form of money that functions in a very different way than the traditional currency we all use on a daily basis. The most fundamental difference is that it is virtual money only, which means there is no Bitcoin or real money to carry around in your wallet.
It’s also issued or created in a one-of-a-kind manner. New cryptocurrency units often enter circulation through a technological process that requires the cooperation of volunteers from all over the world using their computers, rather than being produced by a central bank or government, as U.S. dollars, euros, and other fiat currencies are.
As a result, bitcoin is frequently referred to as “decentralized.” Cryptocurrencies are generally not controlled or operated by a single entity or country. To protect and confirm bitcoin transactions, an extensive network of volunteers from all over the world is required.
How does it work?
Cryptocurrencies themselves act as a means of exchanging or storing money. Still, they are all “blockchains” that are a form of public ledger technology that records data and tracks all transactions sent over the network.
A blockchain is a virtual chain of blocks, each block containing a stack of transactions and other data. Each block in the chain becomes immutable as soon as it is added to the chain. That is, you cannot change or delete the data stored in the chain.
Cryptocurrencies are managed by a network of volunteer contributors called “nodes” rather than a single intermediary, so everyone is honest when recording and adding new data to the blockchain. It is necessary to introduce a guarantee system.
Limited Option for India to Purchase cryptocurrency:
CoinSwitch Kuber Closes All Payments Options After Coinbase, CoinDCX, and WazirX Disable UPI.
As a result of the recent National Payments Commission of India (NPCI) declaration on UPI payments in crypto exchanges, multiple crypto exchanges are closing down UPI as a payment option for Indian users. Furthermore, the government’s unfriendly views against capital gains generated on crypto, as well as a flurry of new rules that went into force on April 1, influenced this decision.
CoinDCX has joined the list of crypto exchanges that have disabled the use of UPI and even IMPS to top up the in-app wallet. CoinSwitch Kuber, in a move similar to Coinbase, has likewise disabled all purchasing possibilities.
Only a bank transfer into the wallet, from which payments can be made, is shown in the CoinDCX app. WazirX has also stopped accepting UPI as a payment method. CoinSwitch Kuber, on the other hand, has totally banned all buy options for Indian consumers.
Coinbase shut down all buying options, including the UPI, on April 10, after its introduction on April 7. For the time being, Coinbase users can only sell their holdings.
After Indian customers saw the installation of the two payment systems (UPI & IMPS) on Coinbase’s app on March 26, rumours stated that Coinbase had begun rolling out UPI and IMPS support for its users in India. The corporation confirmed this at its April 7 launch event.
As a result of the domino effect, major crypto exchanges have either severely limited or completely shut down their purchasing choices for the time being.
“We are aware of the latest announcement released by NPCI regarding the use of UPI by cryptocurrency exchanges,” Coinbase said in a statement. We are dedicated to collaborating with the NPCI and other relevant authorities to ensure that we are meeting local expectations and industry standards.”
CoinSwitch Kuber and CoinDCX have been contacted by the reporters, and the two crypto exchanges have yet to respond.
The platforms Coinbase, CoinDCX, and CoinSwitch Kuber, are not the only ones affected. WazirX had to remove UPI functionality from its platform as well.
Mobikwik, a mobile wallet that had collaborated with major cryptocurrency exchanges, has discontinued enabling cryptocurrency trading. Furthermore, just a few exchanges presently accept bank transfers for crypto trading. Mobikwik is the UPI partner of all three crypto exchanges mentioned here.
When approached by the reporters, the finance startup declined to comment. However, on April 9, reporters quoted Mobikwik’s co-founder and CEO, Bipin Preet Singh, who said that the company had discontinued delivering the service for virtual digital assets, such as cryptocurrencies.
Mobikwik has yet to explain why it made this abrupt change.
While UPI transfers had made crypto more accessible to customers, this is a big blow to the entire industry since trade on several crypto exchanges has hit all-time lows in the immediate aftermath of Mobikwik’s withdrawal. According to reports in the media, certain exchanges will lose up to 90% of their trading volume.
The Government Remains Aggressive Toward Crypto
The National Payments Commission of India (NPCI) issued a statement on the day Coinbase added UPI as a payment option, stating that it was not aware of any crypto exchanges using UPI.
“With reference to the recent media stories about the purchase of Cryptocurrencies using UPI, the National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI,” the NPCI said.
The Reserve Bank of India has been a vocal opponent of cryptocurrencies, comparing them to Ponzi schemes and warning that they will destabilize the country’s economy, among other things.
It is important to note that the Reserve Bank of India is developing India’s own Central Bank Digital Currency (CBDC), the Digital Rupee, which will be a cryptocurrency pegged to the Indian Rupee.
The Indian government, for its part, has enacted a taxation regime that includes a 30% tax on all capital gains made on all VDAs, including cryptocurrencies, a 1% TDS on all crypto transactions worth more than INR 10,000, and a law that prevents capital losses in one crypto instrument from being offset by capital gains in another.
Furthermore, the government is considering including cryptocurrencies in the GST scheme, imposing a 27 per cent tax on all transactions.
All of these issues have caused trading volumes to plunge, and with the TDS kicking in on July 1, trade volumes are projected to reach new lows.
Edited by Prakriti Arora