Coinbase is adding support for the popular UPI payment instrument in India, making its eponymous cryptocurrency exchange functional in the world’s second-largest internet marketplace for the first time.
The publicly traded company, which started testing UPI payments a few weeks ago, made the official launch at its inaugural event in India on Thursday and said it is working to expand its product offerings in the country.
UPI, a payment infrastructure developed by a coalition of retail banks, has become the most popular way for Indians to transact online. Coinbase users in India will be able to top up money and withdraw money from their accounts by using the UPI network, a company executive said. To incentivize customers to try out the Coinbase app, the company said it is offering $2.65 to everyone who signs up.
Notably, the company did not disclose the names of its banking partners for the launch of UPI payments. The vast majority of banks in India continue to scoff at crypto-related transactions, following the local central bank’s longstanding views on virtual digital assets.
Even as India’s Supreme Court struck down the RBI’s cryptocurrency ban two years ago and the nation recently began taxing cryptocurrency transactions, banks are largely following the central bank’s previous direction. RBI officials have publicly called for increased scrutiny of cryptocurrencies.
T. Rabi Sankar, deputy governor of the Reserve Bank of India, argued before an audience at a banking conference in February that cryptocurrencies have been “developed specifically to circumvent the regulated financial system” and are not backed by any underlying cash flow. .
“They have no intrinsic value; that are similar to Ponzi schemes, and may even be worse,” she said.
“As a store of value, cryptocurrencies like bitcoin have given impressive returns so far, but so did tulips in the 17th century Netherlands. Cryptocurrencies are a lot like a speculative or gambling contract that works like a Ponzi scheme. In fact, it has been argued that the original scheme devised by Charles Ponzi in 1920 is better than cryptocurrencies from a social perspective,” he said.
Coinbase declined an interview request with its executives.
The arrival of Coinbase, which operates in dozens of markets, comes at an interesting time in India. Coinbase is already an investor in two of the largest local crypto exchanges in the country (CoinSwitch Kuber and CoinDCX).
New Delhi’s decision to start taxing cryptocurrency income in the country last week has prompted hundreds of thousands of people to curtail or stop cryptocurrency trading, according to sources familiar with the matter.
Coinbase said it is making a “long-term” bet on India. Brian Armstrong, co-founder and CEO of Coinbase, said the company has already invested $150 million in Indian startups and plans to more than triple its workforce in the country to 1,000 this year.
FTX, a much younger crypto exchange and increasingly a big rival to Coinbase, has also started expanding its presence in India. The firm’s venture arm is getting involved with a handful of startups in the country, according to a source familiar with the matter. It is also in talks to back Indian fantasy sports company MPL, TechCrunch reported last week.