Coinbase is blaming India’s central bank for the company’s decision to leave the market
Foreign enterprises face a treacherous route in India’s growing, but frequently ambiguous legal climate when it comes to emerging technology and sectors, such as cryptocurrencies.
During an earnings call on Tuesday, the CEO of Coinbase Global Inc. said that the company had to stop its services to Indian clients due to “informal pressure” from the Reserve Bank of India (RBI).
Because of “informal pressure” from the Reserve Bank of India (India’s Treasury), UPI was temporarily disabled a few days after its introduction, according to CEO Brian Armstrong, during a conference call with investors to discuss the company’s first-quarter performance. He was alluding to the country’s widely used real-time payment system, which the central bank helped develop.
Thus, he said, “they’re using subtle pressure behind the scenes to attempt to block some of these payments that could be flowing via UPI,” which has been dubbed a “shadow ban” by the press.
There was no quick response from a spokeswoman for India’s central bank to an email asking for comment. Attempts to get a response by phone remained unanswered.
When it comes to new technologies and emerging sectors, India’s regulatory framework may be difficult for international enterprises to navigate, as shown by the struggles of the country’s biggest cryptocurrency exchange, it’s easy to see why.
Adding insult to injury, it is very unusual for local competitors to pressure authorities to impose onerous regulations that hinder the worldwide operations of a multinational company.
Financial markets expert Pradeep Gooptu said to Forkast, “This means terrible news for crypto industry investors. When it comes to the global investment community and in-house local investors, I believe it portrays India in a fairly unfavourable light,” he said.
NPCI, the owner of the UPI payments interface in India, has previously opposed WhatsApp’s intentions for payments using its chat interface in the country.
After the parent Meta Platforms Inc. invested in a company founded by Mukesh Ambani, one of India’s wealthiest and most prominent individuals, the company retreated.
Payments through WhatsApp were allowed by the NPCI, with a cap of 20 million users. According to two persons familiar with the subject, WhatsApp recently received authorisation to more than treble the number of users of its payments service in India to 100 million.
A similar miracle would be welcomed by Coinbase. Armstrong, on the other hand, made it clear that all alternatives were on the table in the conversation.
We have concerns that they may be violating Supreme Court rule, which would be fascinating to learn if it were to get there,” Armstrong added without elaborating.
As a result, the country’s supreme court of law has ruled in favour of cryptocurrency companies, eliminating restrictions set by the central bank in 2018. Cointelegraph reports that Coinbase would rather cooperate with the RBI and “concentrate on relaunch.”
According to him, “I believe there are a lot of ways that we need to relaunch with various payment options there.” This is the default course of action going forward.” In the meanwhile, I’m hopeful that we’ll be back up and running in India and a few other places where we’re also seeking international growth,” he said.
India is a unique market since the Supreme Court declared that the government cannot outlaw cryptocurrency, but the Reserve Bank of India does not seem to be as enthusiastic about it, according to Armstrong. Some payments, he alleged, were being “softly pressured behind the scenes” to be disabled through UPI.