Technology
Crypto Transactions Are Not Banned By India's Central Bank-Owned Retail Payments Platform
According to the Economic Times, the National Payments Corporation of India (NPCI), a central bank-owned retail payments system, has deferred the decision on whether or not to authorize consumers to make and collect payments through cryptocurrency trading to commercial banks.
According to the paper, several bankers had evidently requested that the organization block crypto transactions on its network. Instead, the regulator advised banks to contact their regulatory and enforcement authorities before implementing transaction blocking on their own platforms.
“The banks had approached NPCI for restricting direct UPI transactions,” the Economic Times wrote, citing an industry official. “However, the committee has put the onus on banks.”
Even as trade rates of digital assets have soared over the past 12 months, this move is the latest chapter in the unfolding saga on whether the Indian government will clamp down on cryptocurrencies.
The Reserve Bank of India's banking ban on cryptocurrency trading was overturned by the Supreme Court of India in March 2020. The Indian government has been considering a ban on private cryptocurrencies since early this year.
The NPCI's decision to place the burden of proof on the banks arrives at a period when just a few banks are banning cryptocurrency transactions.
According to an ET survey, some banks have blacklisted merchants who purchase or sell cryptocurrencies, but few are preventing consumers from financing crypto trading accounts via net banking or the United Payments Interface (UPI).
“Customers of banks which have disabled crypto cannot anyway use facilities like UPI, net banking or cards,” the industry official told ET. “However, trades continue to happen as many banks are still allowing.”
According to certain analysts, the government will be best served to legitimize bitcoin by taxing it similarly to corporate stock.“Just like you cannot ban porn, you cannot ban cryptocurrency,” Ratan Sharda, author, editor, and TV panelist, said last year.
On Wednesday, IndiaTech.org, a business group that represents India's consumer internet startups and developers, released a white paper urging the government to recognise cryptocurrency as digital assets rather than currencies.
“If NPCI had taken a central decision to disable united payments interface and RuPay cards for investing in cryptos, it would have applied to all banks uniformly and left investors with fewer payment options,” an industry official told ET.
