The Union government and the central bank of India faced a proposal to revive the Unified Payments Interface (UPI), a wildly popular payment interface, by the crypto industry. India’s crypto market which includes the newly formulated crypto policy advocacy group, Bharat Web Association, has already put in two proposals and a third one is in the pipeline.
It is viewed as the first-ever push by India’s crypto stakeholders, to search for policy changes that govern the fast-paced industry. Although the movement started as an uncoordinated one, it gained momentum and added gravitas to an industry, which faced a series of blows in the form of jarring taxes, a crypto winter, and a “shadow ban”.
The shadow ban came in the form of Indian payment processors cutting off banking access to the crypto industry. UPI services were shut down around the same time during the previous year. With the onset of the pandemic in 2019, UPI transactions in India skyrocketed with approximately 74 billion UPI transactions taking place, with $1.5 trillion in the previous year.
The ease of using UPI for the simplest of transactions with the help of a QR code has made online payments feasible as merchants aren’t charged any fees for receiving payments. All of this combined makes UPI a viable form of payment for the majority of the population.
What triggered the crisis that led to Indian exchanges losing UPI access was the launch of Coinbase in India on April 7 2022. The launch of its operations in India and its emphasis on the efficacy of UPI payments to trade on the company app caught the attention of the National Payments Corporation of India (NPCI). Later, NPCI tweeted to clarify that it wasn’t aware of the crypto exchange using UPI for payments that were done on their platform. Henceforth, crypto exchanges in India were denied access to UPI.