Why was Coinbase’s crypto payment service suspended days after its India launch?

cnbctv18.com:

Just three days after launching its India operations, crypto exchange Coinbase was compelled to pull the plug on one of its payment systems. In a unique turn of events between Coinbase and the National Payments Corporation of India (NPCI), the US-based exchange had to temporarily discontinue the purchase of cryptocurrencies through the United Payments Interface (UPI).The sheer size of Coinbase and its mega event on April 7, 2022, attracted a lot of eyeballs, which eventually put it on NPCI’s radar.

And soon after they opened the UPI route to make crypto purchases, the NPCI issued a statement on the same day saying that it was “not aware of any crypto exchange using UPI.” Since then, Coinbase has tried to reach out to the body and seek clarification on the same."We are aware of the recent statement published by NPCI regarding the use of UPI by cryptocurrency exchanges. We are committed to working with NPCI and other relevant authorities to ensure we are aligned with local expectations and industry norms,” said Coinbase in a statement.

“As we enter the Indian market, we are actively experimenting with a number of payment methods and partners to enable our customers to seamlessly make their crypto purchases. One of these methods is UPI, a simple to use and rapid payment system,” the statement went on.NPCI is an arm of the Reserve Bank of India with administrative control over UPI and is overseen by the Ministry of Finance.

Although it is not the regulating authority for payments, NPCI is a body constituted by major public & private sector banks.Therefore, it is in a position to influence UPI-related decisions. It must be noted that no regulation or law prohibits the use of UPI in crypto transactions.