Bitcoin Exchanges Deactivate Deposits In India; Investors In Panic

Indian crypto investors felt immense pressure after two large cryptocurrency exchanges have stopped deposits via a popular payment method. The move caused anxiety among crypto investors in India, as the country still lacks basic regulatory frameworks, despite the Bitcoin popularity surge among its citizens.

Indeed, Indian crypto exchanges WazirX and CoinSwitch Kuber have disabled rupee deposits using the United Payment Interface (UPI), which is a preferred way to purchase cryptos. The widely used real-time payment system in India is regulated by the central bank and reached over $1 trillion worth of transactions in 2021.

Meanwhile, WazirX and CoinSwitch Kuber announced that users can still use the interface to withdraw their funds safely, with Coinswitch Kuber adding that “UPI deposit is currently disabled for all users, however, we are striving to restore it as soon as possible.”

The deposit halt comes amid the world’s second-most populous country struggling to find balanced legislation on crypto assets. However, recently Indian authorities have come closer to recognizing cryptos and putting them into some kind of regulatory framework, as the Indian government approved the taxation of crypto assets.

Trading does not stop

Despite the heavy blow, data from CoinGecko shows that the top three Indian crypto exchanges completed approximately $140 million in trades in the last 24 hours, which indicates normal operations. Meanwhile, the National Payments Corporation of India, the operator of the state-backed UPI system that facilitates bank transfers, made a short announcement that it had no knowledge of its use by any cryptocurrency exchange.

“While we appreciate and respect the notification from NPCI, it is also important to emphasize that a letter like this can lead to confusion amongst the users/investors as to what is legal or illegal when it comes to payment for Virtual Digital Assets (VDA).” Om Malviya, president of Tezos noted.

Furthermore, Indians seem to have increased interest in owning and trading digital currencies, as investments have exploded in popularity over the last year, reaching a multibillion-dollar status. The legislative clarity lack, however, leaves around 15 to 20 million people in the country who own cryptocurrency, with no legal framework.

The regulatory havoc ranged from a widespread crypto ban to taxing cryptos as much as 50%, but finally, lawmakers enacted a 30% tax on profits from digital assets in February. The havoc, according to some sources, managed to shrink the trading volume on India’s largest exchange, WazirX, by 71%.

Investors’ backlash

Indian crypto investors immediately took over social media outlets, as the exchanges like WazirX did not accept the payment gateways of the majority of big banks, including ICICI Bank and HDFC Bank.

“Without providing any information, you have disabled the INR deposit. At the very least, inform us of the duration of the closure,” some of the users Tweeted. The drama with depositing rupees in crypto exchanges escalated with CoinDCX, another large cryptocurrency exchange with over 10 million customers, also restricted depositing and accepted just bank transfers, but also imposed a minimum deposit amount of 3,000 INR.