‘No RBI pressure for crypto apps’ UPI suspension’
MUMBAI: The RBI has not targeted crypto exchanges contrary to claims by Coinbase CEO Brian Armstrong, sources said. While there is no bar against using Unified Payments Interface (UPI) for peer-to-peer and commercial transactions, payment service providers must comply with anti-money laundering and foreign exchange laws, which are tough to implement in crypto trade, a banker said.
Armstrong had said in an analyst call that Coinbase , a US-based cryptocurrency exchange, had launched crypto trading services in India on April 7, 2022. At the time of launch, it announced that Indian users would be able to transact on its platform using UPI.
However, NPCI, which owns and operates the UPI, issued a statement on the same day that it was “not aware of any crypto exchange using UPI”. Soon after, Coinbase suspended UPI transactions. Armstrong, in the analyst call, said that Coinbase had to disable UPI as a payment method due to informal pressure from the RBI and that such action goes against a Supreme Court order.
“The RBI has not done anything or issued any instruction against the Supreme Court order. The RBI, in its circular dated May 31, 2021, had stated that given the order of the Hon’ble Supreme Court, its earlier circular of April 6, 2018, which had banned virtual currencies, is no longer valid,” said a banker aware of the matter.
Although there is no bar on cryptocurrencies, the RBI has publicly highlighted its concerns. In its circular dated May 31, 2021, the RBI had advised its regulated entities to continue to carry out customer due diligence processes in line with regulations governing KYC/AML/CFT and obligations under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA).