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Yet another sigh of relief has been directed towards the future of crypto in India, as NPCI announced its refusal to ban crypto trade, according to an Economic Times report.
The crypto journey in India has been more of a rollercoaster ride, to say the least, with several rumors and anonymous statements from officials claiming a possible crypto ban across the nation over the years. However, the rumors somewhat subsided a couple of months back, in lieu of Nirmala Sitharaman’s statement on keeping a window for experimenting with cryptocurrencies and stating that the crypto space can no longer be overlooked.
NPCI Refuses Ban on Crypto, Leaves the Call on Banks
National Payments Corporation of India (NPCI), the domestic payments authority which runs UPI, refuses to ban crypto transactions. The authority has left the call on banks to make their decisions according to their legal and compliance department’s advice. NPCI’s decision sees light with the Supreme Court’s 2020 verdict that ruled out RBI’s proposal to ban banks and finance companies to deal with or offer services in cryptocurrencies.
Moreover, NPCI’s advice comes at the need of the hour as several banks continue to restrict payments for cryptocurrencies. The report also mentions:
“Almost half-a-dozen banks have directed payment gateway operators to blacklist merchants involved in the trade of cryptocurrencies.”
Banks create a barrier for users to access transfer methods by restricting UPI or net banking use to send funds for trading cryptocurrencies. In a situation where NPCI would have made the opposite decision to deny UPI and RuPay cards for crypto trading, the ET report mentioned:
“If NPCI had taken a central decision to disable UPI and RuPay cards for investing in cryptos, it would have applied to all banks uniformly and left investors with fewer payment options. Customers of banks which have disabled crypto cannot anyway use facilities like UPI, net banking, or cards. However, trades continue to happen as many banks are still allowing. It’s unclear how long they will continue to.”
“Banks Barring Payments Is Unconstitutional”
Furthermore, it is important to acknowledge that exchanges are service provides that offer a marketplace for consenting buyers and sellers to trade assets in a safe space. According to a statement by Ashish Mehta, co-founder of DigiX, to ET:
“Denial or delay in providing support to such trades would be harmful for the entire economy.”
He also mentioned:
“Banks barring payments for such trades is not within their constitutional rights after the Supreme Court’s ruling.”
Banks’ unsupportive nature towards crypto trades contributes hindrance and makes it difficult for investors to sell crypto assets. Moreover, given the growth, adoption, and applications of cryptocurrencies worldwide, such notorious behavior and uncertainty around virtual currency can leave India lagging behind.