Coinbase, the popular cryptocurrency exchange program, made an interesting announcement related to cryptocurrency in India in the last week. While most warmly received the announcement, some financial institutions brought up concerns.
Coinbase said they would add support to India’s popular UPI payment instrument in their announcement. This will effectively make Coinbase functional in the second largest internet market for the first time.
UPI is the most popular way for most Indians to make transactions online. A coalition of local retail banks created this infrastructure. Coinbase users can top up and withdraw money from their accounts using the UPI system. This UPI-linked feature is currently being tested in a select few areas of India. To incentivize more people to start using Coinbase, the company offers $2.65 to everyone who signs up.
While Coinbase did not release the names of its banking partners, there is still a lot of negativity between the local financial institutions in India and their views on cryptocurrency. Deputy Governor of the Reserve Bank of India, T. Rabi Sankar, told an audience that cryptocurrency is similar to Ponzi schemes in that the system is unregulated and it’s not backed by any underlying cash flow.
Coinbase is already an investor in two of the largest cryptocurrency exchanges in the country, namely CoinSwitch Kuber and CoinDCX. Despite this involvement, they are still planning on expanding Coinbase into the Indian market. This announcement also came when New Delhi decided to start taxing crypto income with a heavy rate of 30%. This income tax on cryptocurrencies has reflected a decline in crypto trading within India.
Coinbase reported that they are placing a long bet on India when asked about this most recent move. However, we also wonder if this move could be because FTX, a young competitor of Coinbase, recently started expanding into the newly emerging Indian market.
