Coinbase’s chief executive officer and co-founder Brian Armstrong has revealed the cryptocurrency exchange stopped its trading service in India just after its official launch due to “informal pressure” by the Reserve Bank of India.
The Nasdaq-listed company launched its crypto trading service in India on April 7 and announced that it will allow its users to buy crypto via UPI (unified payments interface) in the country.
However, shortly after the launch, it halted operations after the National Payments Corporation of India (NPCI) refused to acknowledge UPI support for the Coinbase app, saying it was “not aware of any crypto exchange using UPI.”
NPCI manages the UPI payments infrastructure built by a coalition of retail banks in India.
During Coinbase’s first quarter 2022 earnings call on May 10, Armstrong talked about receiving informal pressure from the government and RBI, and said that RBI’s action could be in violation of the Supreme Court of India’s ruling that overturned the RBI’s ban on cryptocurrency.
“India is a unique market in the sense that the Supreme Court has ruled that they can’t ban crypto, but there are elements in the government there, including at Reserve Bank of India, who don’t seem to be as positive on it,” Armstrong said during the call.
“In the press, it’s been called a shadow ban; basically, they’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” he said.
Notably, the Indian government recently imposed a 30% tax on income from crypto and other virtual digital assets in India earlier this year, making cryptocurrency legal in the country.
Additionally, a 1% tax deduction at source (TDS) will be applicable on every crypto transaction starting July 1. Market experts said that the TDS move is likely to drive volumes further down.
However, despite these issues, Armstrong said that Coinbase was working with the RBI and is exploring other payment options.
“I think our preference is really just to work with them and focus on relaunching. I think there’s a number of paths that we have to relaunch with other payment methods there. And that’s the default path going forward,” he said. “My hope is that we will be live back in India in relatively short order, along with some other countries, where we’re pursuing international expansion similarly.”
The RBI has been contesting the use of crypto over the years, citing concerns over financial stability in the country. The governor of the RBI recently said that private cryptocurrencies are a major threat to the country’s overall macroeconomic stability and will undermine the central bank’s ability to maintain financial stability.
The RBI plans to launch its own digital currency, the digital rupee, sometime next year.
Coinbase’s corporate venture arm, Coinbase Ventures, already backs two of the largest local crypto exchanges in the country, CoinDCX and CoinSwitch Kuber.
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