Just days after its launch, cryptocurrency exchange Coinbase had to suspend operations in India due to “unofficial pressure” from the central bank.
According to Bloomberg, Coinbase provided an update on its activity in India during its first quarter earnings press conference on May 10, specifically on why it was shutting down the country’s crypto market. Specifically, Coinbase CEO Brian Armstrong said that India’s central bank has placed “unofficial pressure” on Coinbase, preventing the exchange from facilitating purchases of crypto assets through the system. India online payments.
|Coinbase CEO Brian Armstrong Says Central Bank Has Put “Informal Pressure” on Coinbase|
“A few days after the launch, we had to disable the Unified Payments Interface (UPI) operation because of some informal pressure from the Reserve Bank of India (RBI),” Mr. Armstrong said.
UPI is a unified payments interface housed in a central bank-backed system that facilitates the transfer of funds between bank accounts in real time. Last month, in a step towards expanding operations into India, Cryptocurrency exchange based in the US has integrated UPI on its platform to enable the purchase of cryptocurrencies with rupees. However, just three days after the launch, Coinbase had to stop the service because the organization that runs the UPI said it was “not aware” of any crypto exchanges using the interface.
Armstrong noted that what the RBI is doing has been described by the media as a “shadow ban”. “Essentially, they are applying soft pressure behind the scenes, trying to disable some of the payments that are possible through UPI. We are concerned that they may violate the Supreme Court’s decision.” It is known that India announced a new tax regime for crypto assets in early February 2022, but the government has yet to finalize the regulatory framework.
Despite the setback, Coinbase hopes to resume operations in India in the near future, along with other countries. Coinbase Plans to Make India the Hub technology and triple the number of employees in the country to about 1,000 people by 2022.
India has a “hot and cold” relationship with electronic money in the past few years. In 2018, the RBI excluded crypto startups from the country’s banking network. However, the Supreme Court overturned this restriction in March 2020. Even so, India’s central bank remains firmly opposed to Governor Shaktikanta Das, who sees cryptocurrencies as a threat to financial stability and devoid of any fundamental value.