Halted UPI payments, crypto trading in India due to informal strain from RBI: Coinbase CEO

Top cryptocurrency exchange Coinbase quit India activities attributable to the "casual strain" from the Reserve Bank of India (RBI).

New Delhi: Top cryptocurrency exchange Coinbase quit Indian activities attributable to the "casual strain" from the Reserve Bank of India (RBI), its CEO Brian Armstrong has revealed for the first time. The US-based and Nasdaq-listed exchange had ended all the installments via unified payments interface (UPI) mode on its app in India last month. In the company’s earnings call late on Tuesday, Armstrong said that the organization disabled the UPI "because of some informal pressure from the Reserve Bank of India".

"There are elements in the government there, including at the Reserve Bank of India, who don`t seem to be as positive. And so they -- in the press, it’s been called a `shadow ban`, basically, they`re applying gentle pressure behind the scenes to try to disable some of these payments, which might be going through UPI," Armstrong told analysts. The crypto exchange reported its first deficit as a company of $430 million in the first quarter this year. The revenue dropped 27 percent to $1.17 billion, down from $1.6 billion in the first quarter of 2021 and monthly users were also decreased by more than 19 percent to 9.2 million, as the global crypto market goes through the mayhem.

Armstrong said that the RBI’s move "may be actually in violation of the Supreme Court ruling, which would be interesting to find out if it were to go there". "Now the press is talking about it in India. Now there are meetings happening that are going to talk about how we get to the next step. So that`s generally our approach with international expansion," he added. The exchange launched its crypto trading services in India on April 7.

The goods and services tax (GST) council is reportedly mulling a 28 percent tax on cryptocurrencies. The Ministry of Finance has already imposed a 30 percent tax on profits made from the transfer of crypto assets and non-fungible tokens (NFTs). India distinguishes between cryptocurrencies and crypto assets, and Union Finance Minister Nirmala Sitharaman during the Union Budget 2022-23 in February announced a 30 percent tax on income from these transactions, which includes a 1 percent deduction at source.

Her proposal of levying a 30 percent tax on crypto earnings came into effect on April 1. The 28 percent GST will be in addition to the 30 percent income tax on earnings from crypto-asset transactions. There is also 1 percent TDS (tax deducted at source) on transactions in such asset classes above a certain threshold. Gifts in crypto and digital assets are also taxed.