Crypto exchanges in India take one final blow: the most relevant bank’s payment blocking.
The State Bank of India, SBI, the first country’s public sector bank, has set a blockage to payments in cryptocurrency on its Unified Payment Interface (UPI), according to a report conducted by The IndiaTimes.
The UPI payment mechanics let users transfer funds to other accounts using UPI addresses similar to email accounts that can link to bank accounts.
SBI has asked payment processors to set a blockage procedure for all payments to crypto exchanges. It means that crypto investors in India cannot use SBI’s UPI payment method to manage transactions on exchanges.
Over the past six months, exchanges in India have increasingly faced banking challenges. In May, SBI’s Cards and Payment services sent emails to their clients demanding clarification for cryptocurrency-related transactions.
The email mentioned an old central bank circular from 2018 prohibiting banks from managing any type of crypto businesses, which was struck down by the country’s highest court last year.
At the time, the email warned customers not to deal with cryptocurrencies and threatened suspensions or account closures in the event of non-compliance with their demands.
ICICI Bank Reportedly Blocked Crypto Payments
HDFC Bank had sent similar emails to its clients at the same time. Earlier in the month, ICICI bank, the country’s most relevant entity, had blocked crypto payments. On May 31, the Reserve Bank of India stated that its 2018 got struck down by the Supreme Court.
However, the RBI statement did not order banks to restart services to crypto companies, despite having the authority to do so. Following the statement from the Reserve Bank, the HDFC and SBI retracted their emails.
Over the following months, exchanges had kept negotiating with banks to restart services, while the only available mode of payment was through mobile wallets. For example, the crypto exchange WazirX, owned by Binance, only allowed payments through the MobiKwik wallet.
However, the transaction limits and wallet charges made customers wary of making crypto transactions Forkast account.
In September, a lot of exchanges reintroduced payments through net banking supported by select banks. The list of supporting banks counts on big names like Deutsche Bank, Federal Bank, Indian Overseas Bank, and Punjab National Bank.
On the other hand, WazirX had also reintroduced payment through the UPI feature, which got suspended once again. CoinDCX, however, still allows payments using the UPI method.
Regulatory Challenges Have Entered into a Grey Zone
WazirX CEO Nischal Shetty told IndiaTimes that they are trying to discuss and present new points to SBI. WazirX complies with KYC and AML policies.
The latest banking challenge arrived even though cryptocurrencies are currently in a regulatory grey zone. The RBI has clarified its stance against cryptocurrencies and has proposed a blanket ban.
The country’s crypto bill is still awaiting approval from the Union Cabinet. The subject will open discussions in the next session of parliament if cabinet approval comes in November.
By: Jenson Nuñez
