How Indian Users Can Invest INR in Crypto Now – UPI, IMPS, RTGS, NEFT not working?


Even as there is no clear-cut policy on the legality of crypto as of now in India, the Government and the regulatory bodies are apparently trying to make it difficult for anyone to buy or invest in these virtual digital assets with Indian rupee (INR).

Several crypto exchanges in India have temporarily disabled INR deposits via UPI to avoid any confrontation with National Payments Corporation of India (NPCI). This development took place after NPCI recently said it was not aware of any crypto exchanges in India using UPI for buying crypto. Following this, payment wallet Mobikwik stopped supporting crypto trading on exchanges. Earlier, users could deposit money in the Mobikwik wallet through UPI and then use it to buy crypto on the exchanges.

While exchanges like CoinSwitch Kuber have temporarily disabled all INR deposit services including UPI and bank transfers via NEFT, RTGS and IMPS, others are still showing netbanking option for INR deposits to buy crypto but the list of supporting banks is very small. In fact, big banks are not supporting crypto exchanges, making it difficult for their own customers to buy crypto.

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“The regulatory regime for crypto in India has been clarified significantly post budget, but it appears there is still room for interpretation post NPCI’s comments. Most exchanges are employing an abundance of caution, seeking not to offend the regime in what is projected to be one of the largest crypto markets globally,” Utkarsh Sinha, managing director at Bexley advisors, told FE Online.

Experts see the denial of financial services to bank customers interested in buying or investing in crypto as very unfair, especially when crypto has not been declared as illegal in the country.

“Denial of financial services to crypto investors is grossly unfair. The unavailability of UPI and IMPS means there is no seamless option to convert Indian rupees to crypto,” said Sharat Chandra, VP, Research and Strategy at blockchain-based identity management platform EarthID.

With IMPS, NEFT, UPI and RTGS services being temporarily disabled on crypto exchanges, the only option for buying these virtual assets is through peer-to-peer (P2P) transactions which can happen online or offline.

“P2P transactions are still open. When the RBI had banned all banking channels for crypto in 2018, then also exchanges were running through P2P,” Tushar Chaudhary, director of Digital Assets LLP, told FE Online.

Is P2P safe?

Crypto experts say P2P transactions in virtual digital assets are as safe as any transaction between two human beings.

“In crypto authenticity is never a problem, no body can sell you a fake bitcoin as transactions happen on the blockchain. So the risk is same as transaction of any product or any services offline between two individuals. There is no additional risk which people think there might be because there is no regulation,” said Chaudhary.

P2P crypto transactions can also be done on exchanges, which act as mediators to reduce the risks.

“Peer to peer crypto trading on P2P exchanges is driven by an escrow wallet where crypto investors need to send their funds. Decentralised exchanges offer multi-cryptocurrency wallet support, making it easier for investors to trade,” said Chandra.

He further said it is important to note that crypto to crypto trading executed on decentralised exchanges does not involve an escrow wallet.

“A smart contract fulfils the escrow service role and order matching function. The absence of escrow protection does carry significant risks for investors’ funds. Any bug in the smart contract can expose your funds to hackers,” Chandra added.

Can govt ban P2P as well?

Experts say it won’t be easy for the Government to ban P2P transactions as it is the Constitutional right of citizens to buy or sell any services.

“Govt can ban anything and everything…If govt tomorrow says no individual can buy or sell crypto through P2P then there is always the court or the judiciary to which citizens, exchanges and individuals can approach. Because it is our constitutional right to buy or sell a service,” said Chaudhary.

“The Government doesn’t recognise crypto as a legal tender. But it is time for the Government to clarify what it recognises crypto as. RBI has been saying crypto will have harmful effect on the economy and the fiat ecosystem but till date it has not been able to prove how crypto is having an adverse effect on country’s financial market and currency… Just like saying it will have adverse effect is not enough,” he added.

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Chandra suggested that as exchanges are being forced to disable UPI and IMPS services, investors holding crypto may look for options like staking to earn a passive income.

(Cryptos and other virtual digital assets are unregulated assets in India. Investing in them could lead to losses. Please consult a professional financial advisor before making any investment decision in crypto)



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