If you are using the cryptocurrency exchange app WazirX to buy and sell Bitcoins and cryptocurrency in India, you need to note that one major payment option will no longer be available. In a communication sent out to all WazirX users, the platform has clarified that their Paytm Bank account will not be operational now, which means the bank transfer option using NEFT or IMPS transfers from your bank account, will, not be available for the time being. That is till WazirX is able to find a new banking partner for bank transfer and deposit options. This is the latest in the unfolding chapter of cryptocurrency trading in India and the reluctance of banking institutions to engage with crypto exchanges. At this time, WazirX as well as CoinSwitch Kuber and CoinDCX are unable to offer UPI payments as an option for users, because of this reason.
WazirX says that starting 11:59ppm on May 20, 2021, INR or Indian Rupee deposits to the Paytm Bank account will not be accepted. Simply put, this means that the recipient bank account, which in this case, was WazirX’s Paytm Bank account, which now will no longer accept any transfers made to it. “If you make any INR deposit via IMPS/NEFT/RTGS to our PayTM Bank account after 11:59 PM IST, it will revert to your source bank account within 7-10 business days,” says WazirX in a statement shared with users. They do add,” While we work with our partners to add more INR deposit options, we recommend you to use WazirX P2P to buy/sell USDT with INR.” The only available option, called WazirX P2P, allows you to buy and sell USDT directly with other buyers and sellers. Once you choose the quantity of USDT you want to trade, the app then proceeds to match you with sellers or buyers who is looking to make a trade at that time. For instance, if I am to buy 15 USDT, WazirX P2P will search and connect me with any sellers who may want to sell USDT at that time. At the time the exchange is agreed and commences, WazirX keeps the USDT in an escrow account for safekeeping. As a buyer, I will make a direct transfer to the seller, using bank transfer or UPI as the modes of payment. Once the seller confirms having received the payment, the USDT are released and added to my WazirX account.
During a test to buy 15 USDT at the time of writing this, the app attempted to match me with interested sellers. However, no matches or P2P were available, which perhaps highlights the limitations of this method—you will be dependent on someone being ready at any time to make the trade, which may further reduce your accuracy of trading in crypto coins exactly when the value may be right for you. That being said, USDT is a stable coin and the value is pegged at $1 always. And once you have the USDT in your account, you’ll have to convert your fiat to USDT using WazirX P2P and then use the USDT to buy any cryptocurrency on the platform. At the time of selling any cryptocurrency, you’ll have to convert that into USDT within the app and then sell using USDT.
This is just the latest in the long running saga of banking institutions in India showing unwillingness to support cryptocurrency exchanges in India. Apps including WazirX, CoinSwitch Kuber and CoinDCX have been unable to offer UPI, or unified payments interface, as a payments option for users for adding money to in-app wallets for trading in cryptocurrencies including Bitcoin, Ethereum, Litecoin, Cardano, Dogecoin, Shiba Inu and Polygon, to name a few. The National Payments Corporation of India, which runs the UPI real-time payments system, has refused to ban cryptocurrency transactions in India. Instead, they have asked banks to make their own guidelines with regards to transactions that involve cryptocurrencies. In an interaction with CNBCTV18 in March, Finance Minister Nirmala Sitharaman clarified that, “There will be a very calibrated approach to be taken on crypto” and insisted that there will be a “window available for all kinds of experiments”, something that is seen as a positive for the cryptocurrency space in India.
For a user to use UPI payments, it’ll always be done from a bank account that is KYC-compliant, often using the biometrics authentication using the Aadhaar card. These are bank to bank transactions, with the entire chain being KYC compliant. It is not clear why banks are payment gateways are hesitating to allow cryptocurrency transactions at this time. Banks are yet to issue any advisories or guidelines to users, who may be interesting in investing in cryptocurrencies such as Bitcoin and Ethereum. According to numbers by global crypto exchange Paxful, as of December 2020, India is the second largest Bitcoin market in Asia. And the sixth biggest market in the world, behind USA, Nigeria, China, Canada and UK.