State Bank of India cuts off payments made with its UPI to crypto exchanges
SBI bank customers will not be able to transfer funds via the UPI to crypto exchanges to buy cryptocurrencies, including bitcoin
The State Bank of India (SBI) has cut off payments made with its Unified Payments Interface (UPI) to cryptocurrency exchanges.
The news comes as several Indian banks have been disabling fund transfers to crypto exchanges. SBI bank customers will not be able to transfer funds via the UPI to crypto exchanges to buy crypto, including bitcoin.
SBI's decision might make it so that other banks are reluctant to accept cryptocurrency merchants for onboarding onto their UPI platforms,
However, the National Payments Corporation of India (NPCI) said it would not be blocking payments to crypto companies using UPI. The NPCI has instead said banks should make their own decisions on what to do about crypto payments, according to the report.
There’s also not much that the exchanges can do, unless they want to sue the banks for wrongfully discriminating against them.Industry executives have said that they are working to get more bank partners onboard.
India is among those countries looking to institute a CBDC, with plans to launch a trial soon.
Crypto’s controversy in India
Crypto has always been a challenging sector in India because of the lack of regulatory clarity, right from the banking ban in 2018 to the draft bill in 2019 that talked of regulations, which in reality was more about prohibiting than regulating.
In addition, there was confusion about whether crypto is legal, or what the government would do to support it or shut it down.
India has nearly 15-20 million investors who hold crypto worth Rs 15,000 crore — and an increasing number of people are looking to get into the space, especially following the bitcoin price rally over this year.
Nearly 350 Indian startups are operating in the cryptocurrency field, and its related blockchain space.
The Reserve Bank of India has been quite vocal about its reservations on virtual currencies. Governor Shaktikanta Das recently said the central bank had conveyed to the government its "serious and major" concerns around crypto and its financial stability.
TIMELINE OF IMPORTANT EVENTS IN INDIAN CRYPTO ECOSYSTEM
September 2021- SBI bans crypto exchanges to use its UPI
May 2021- RBI asks banks to not block transactions based on Invalid Circular
May 2021 -SBI threatens to suspend or cancel credit cards used for crypto transactions citing RBI circular
May 2021- ICICI Bank and Paytm Payments Bank block crypto transactions
March 2020 - Supreme court overturns the ban of cryptocurrencies
2018-2020: Representatives from various crypto-related businesses challenge the constitutional validity of the RBI's decision
August 2018-Leading Indian banks stop a slew of their services to cryptocurrency exchanges citing RBI's ban
APRIL 2018-RBI issues statement to stop providing services to bank who deal with crypto entities, initiates ban against crypto.
By Klever Support Team member,