In mid-April, companies that provide cryptoasset trading services in India, such as Coinbase, which recently started operations in the country, suspended the possibility of rupee deposits or faced problems with their payment gateways.
Some of these gateways, such as MobiKwik, stopped working with Indian exchanges on April 1. As a result, investors are limited to using manual, time-consuming, and error-prone methods.
In the case of Coinbase, payment services through the United Payments Interface (UPI) were discontinued three days after its launch in India. The exchange has already updated its website with information regarding payment methods for Indian users, encouraging them to try the Immediate Payment Service (IMP).
India increases pressure on the crypto sector
In addition to monitoring more rigorously and controlling rupee deposits, India is also preparing a new tax on cryptocurrency transactions, which is expected to effect on July 1. In April, the country’s government introduced a 30 percent tax on income from investments in digital assets.
As a result, daily trading volumes on Indian exchanges, which about 15 million users carried out, have fallen between 88% and 96% since last year’s peak, according to CoinGecko data presented by Bloomberg. WazirX, India’s largest cryptocurrency exchange, saw its volumes drop 93% compared to October’s high.
Coinbase: India expansion plans undermined
The sudden changes left Coinbase customers with no alternative to funding their accounts with rupees, which has damaged the company’s expansion plans in the country. “We are committed to working with NPCI and other relevant authorities to ensure alignment with local expectations and sector norms”, a company spokesperson said in a statement to Bloomberg on April 11, referring to the National Payments Corporation of India, which operates UPI.
In addition to Coinbase, four other exchanges have suspended rupee deposits. Two other companies in the sector were already facing problems with payment providers days earlier.