Does this mean that the government refuses to ban cryptocurrency?
National Payments Corporation of India (NPCI) is the authority that runs Unified Payments Interface (UPI) in India has confirmed that they refuse to ban cryptocurrency transactions and has instead asked banks to take a call based on their risk assessment.
NPCI refuses to ban cryptocurrency
The domestic payments authority NPCI refuses to ban cryptocurrency transactions, making it the responsibility of the banks to whether or not to ban transactions of cryptocurrency trades or not. It told banks to make a decision based on the advice of their legal and compliance departments.
The NPCI’s advice is significant at a time when many banks are restricting payments for cryptocurrency deals. A lot of banks have directed their payment gateway operators to blacklist merchants involved in the trade of cryptocurrencies. These banks restrict customers from using online fund transfer methods such as net banking and UPI to trade cryptocurrencies.
NPCI’s decision to restrict payment for cryptocurrency trades on UPI and RuPay cards would invariably be applied across all banks and investors would be left with very little option to conduct such trades. Users of banks which have disallowed crypto trades cannot use UPI, net banking or cards but trades continue as some banks still allow it. But it remains uncertain for how long it will continue.
NCPI has not blocked the trades but has limited its trade route. Recently, in inter-ministerial discussions, lawmakers reportedly discussed granting investors an exit window of 3-6 months before completely banning the trading, mining and issuing of cryptocurrencies in India with the upcoming Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
The proposed legislation that is yet to be tabled in the Parliament might only legalise the cryptocurrency currently mooted by the Reserve Bank of India (RBI) while banning all others. Reports suggest that Indian owns digital coins worth over $1.5 billion or Rs 10,000 crore. But as of now, NPCI refuses to ban cryptocurrency completely.