Business

Various Challenges For The Industry -By ASC


With crypto payment options frozen, the challenge is increasing for the industry

The Union Budget of 2022 ushered in a new era of hope for the Indian cryptocurrency industry. When Finance Minister Nirmala Sitharaman proposed a 30 per cent tax on virtual digital asset transactions and 1 per cent TDS on such transactions, the industry saw it as official recognition.

However, the industry has faced new obstacles almost every day over time.

With the new tax rules coming into effect from April 1, the Indian crypto exchange saw a significant decline in trading volume, but that was only the beginning of the crypto industry’s problems.

A few weeks ago, after a Coinbase official revealed that a global crypto exchange would allow consumers in India to acquire cryptocurrencies through the Integrated Payments Interface (UPI), the crypto exchange was scrutinized by the National Payments Corporation of India (NPCI), explaining that it not aware of any exchanges that use UPI.

So, to avoid clashes with NPCIs, some crypto exchanges in India have banned INR deposits using UPIs. In addition, major Indian banks have also stopped offering services for crypto trading.

Although the Reserve Bank of India (RBI) or NPCI has not issued official directives, circulars or statements prohibiting banks or other payment systems from providing services to crypto exchanges, the challenges faced by crypto exchanges have multiplied.

Since 2018, when the central bank issued directives to lenders prohibiting them from working with digital asset companies, crypto trading firms in India have had strained relationships with banks and payment service providers.

Although the Supreme Court overturned the order in 2020, some banks remain wary of working with the crypto sector as top RBI officials have repeatedly called for cryptocurrencies to be banned.

As a result of the skepticism of the traditional banking sector, payment gateways such as MobiKwik have become a critical link between crypto exchanges and customers looking to deposit fiat currency.

Now, after NPCI’s stand against UPI, this option has been disabled, making it very difficult for investors to buy cryptocurrencies.

Shouldn’t the RBI issue an official circular on its stance on banks or payment systems that provide services to crypto exchanges in such a scenario?

If its official stance has changed, shouldn’t the RBI make a statement detailing the development?

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