The challenges of the United States’ largest cryptocurrency exchange reflect the risky route foreign entities must navigate in India. Following “informal pressure” from the Reserve Bank of India (RBI), COINBASE Global Inc. had to shut down its services to Indian consumers, according to the company’s CEO in an earnings call on Tuesday.
Per the latest Bloomberg report, India’s central bank put pressure on one of the world’s largest cryptocurrency exchange platforms, suspending the purchase of crypto assets through the country’s online retail payment system.
Thus according to Brian Armstrong, the firm’s CEO, the Reserve Bank of India informally urged the company to disable UPI (Universal Payments Interface) a few days after the launching.
The UPI is an Indian method for linking fiat and digital assets. Because it uses real-time transfers between bank accounts, the country’s central bank approved its activity. The RBA, according to Bloomberg, has made no remark on the issue.
The crypto firm from the United States expanded its operations in India in April by integrating the government-backed payment interface. Users could pay in rupees and legally buy cryptocurrencies with the central bank-backed platform. The platform served as a link between digital assets and fiat currency.
As said by the UPI officials, no cryptocurrency exchanges are currently using their network to make payments. Coinbase, for its part, stated that it is not exiting the Indian market and that it plans to reopen in the near future. By the end of the year, the company hopes to have tripled its workforce.
The RBI has regularly warned against cryptocurrency trading, with one deputy governor asking for an outright ban. From April 1, the country levied a 30 percent flat tax on all cryptocurrency gains, resulting in a 70 percent drop in trading volumes – the largest in years. On July 1, a 1% yearly charge on transactions over INR10,000 (US$129) and INR50,000 (US$646) for certain persons would take effect.
Tax officials are also considering imposing a factory-gates tax of 28 percent on all crypto transactions, similar to those imposed on lotteries, casinos, and other types of betting.