Coinbase halted trading service in India because of “informal pressure” from the Reserve Bank of India, the crypto exchange’s chief executive said on Tuesday, addressing the notable Indian episode for the first time in a month.
The Nasdaq-listed firm launched its eponymous crypto trading service in India to much fanfare on April 7. The app allowed users in the world’s second largest internet market to buy crypto tokens using UPI, a highly popular Indian payments infrastructure built by a coalition of retail banks. But just three days after the launch, the firm rolled back the service without an explanation.
The move followed a strange statement made by the National Payments Corporation of India, the governing body that oversees UPI in the country, in which it refused to acknowledge UPI support on Coinbase’s app.
Asked about the Indian episode on the company’s earnings call, Coinbase co-founder and chief executive Brian Armstrong said Coinbase disabled UPI “because of some informal pressure from the Reserve Bank of India.”
Armstrong pointed out that cryptocurrency trading is not illegal in India — in fact, the South Asian nation just recently started to tax it — but there are “elements in the government there, including at Reserve Bank of India, who don’t seem to be as positive on it. And so they — in the press, it’s been called a ‘shadow ban,’ basically, they’re applying soft pressure behind the scenes to try to disable some of these payments, which might be going through UPI,” he said.
The Reserve Bank of India’s action “may be actually in violation of the Supreme Court ruling, which would be interesting to find out if it were to go there. But I think our preference is really just to work with them and focus on relaunching. I think there’s a number of path that we have to relaunch with other payment methods there. And that’s the default path going forward,” he said.
The Reserve Bank of India had earlier banned cryptocurrency — a decision overturned by the nation’s apex court over two years ago — but the central bank continues to informally exert pressure on banks from engaging with cryptocurrency exchanges, TechCrunch reported earlier.
This pressure — and the banks’ compliance — is the reason why popular cryptocurrency exchanges in India periodically face issues with supporting fiat currency in the country. An executive at one of the cryptocurrency exchanges told TechCrunch that they too may challenge the central bank’s action in the court, but cautioned that such a court battle may take years and their businesses might get obliterated in that time, which is why the crypto players in India are hopeful that the central bank will relax its stance on its own in some time.
I guess just to zoom out for a minute, one of our theories here and my theory is that action produces information. So it’s not always clear as we go to these countries all over the world, everybody is in varying states of kind of education or lack thereof about crypto. And there’s a lot of work to go meet with policymakers around the world and kind of teach them about what the AML capabilities are and what are the positive benefits. The people of these countries generally really want crypto. And so to me, that says that most places in the free world and democracies, crypto is going to eventually be regulated and legal, but it’s going to take time for them to get comfortable with this.
And the way that we push the conversation forward is by taking action. That’s why we’re going to go launch, even if we’re not exactly sure how it’s going to — the reaction is going to be received, we’re going to launch because it forces the discussion to be had. Now the press is talking about it in India. Now there’s meetings happening that are going to talk about how we get to the next step. So that’s generally our approach with international expansion.