At a time when the fate of cryptocurrency acceptance hangs mid-air in India, the NCPI has made a massive announcement in favour of your beloved tokens!
According to the latest media reports, the National Payments Corporation of India, aka NCPI, has refused to ban crypto-related transactions and has decided to put the onus on banking institutions whether to ban crypto trades or not. The domestic payments’ authority told banks that they must make the decision based on the advice provided by their own legal and compliance departments.
As mentioned before, NCPI’s decision comes at a time when banks are refusing to accept payments for cryptocurrency deals. As per media sources, close to half a dozen banks have given directions to payment gateways to blacklist merchants who actively trade cryptocurrencies. The anti-crypto banking institutions restrict their customers from using online fund transfer methods such as internet banking and UPI to trade tokens.
But now, after NCPI’s recent decision, crypto merchants can still salvage their trading activity by relying on banks that still allow it. If the NCPI had announced otherwise and chosen to restrict UPI and RuPay card transactions related to cryptocurrencies instead, then it would have invariably left all crypto investors and enthusiast high and dry.
The domestic payments authority’s decision is based on the ruling passed by Supreme Court in March 2020. Last year, the apex court overruled a directive by the Reserve Bank of India, which, effective from April 2018, asked banks and finance companies to ban anyone “dealing in virtual currencies” or “providing services to facilitate crypto trading”.
The NCPI has decided not to block transactions related to cryptocurrencies given that the RBI has not yet rolled out any directive following Supreme Court’s ruling in the last year.
Currently, every bank holds a varied take on crypto trades based on their internal risk assessment. Ashish Mehta, Co-founder of DigitX, in a statement about the same, said that the banks which are barring the payments for token trades are not acting within their constitutional rights as per the March 2020 ruling of the Supreme Court.
Exchanges act as service platforms that provide a marketplace for consenting buyers and sellers to transact in a secured environment. And furthermore, because these exchanges do not directly buy or sell such assets, Mehta said that the payment gateways and banks must not strip them away from the ability to process payments.
He also warned that delaying in providing support for such trades will be harmful to the entire economy. Because, in such a scenario, crypto traders are either moving to other banks that allow crypto trading or are relying on less efficient fund transfer options such as IMPS, RTGS or NEFT, which are not-so-popular options when it comes to stock forex or commodity trading on exchange platforms.
All in all, it is well understood that if banks do not support crypto-related trades, it will become increasingly difficult for investors to sell such assets. And while there do exist ways that allow selling decentralised currencies to international buyers in peer to peer aka P2P deals, the same would simply fetch lower prices and add to the currency conversion cost besides attracting queries from the tax department.
Thus, now it remains to be seen if banks will continue to impose individual policies about cryptocurrency trending or the RBI will step in with a more uniform approach to this entire debacle and settle it once and for all. We will keep you updated on all future developments. Until then, stay tuned.