Coinbase CEO Brian Armstrong revealed during the company’s Q1 earnings call that its decision to shutter its business in India was prompted by ‘informal pressure’ from the country’s central bank.
Back in April, just three days after the launch of Coinbase India, the domestic arm of the global exchange had suspended Unified Payments Interface (UPI) support on its platform.
Chief executive officer Brian Armstrong now clarified, “So few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India.”
Coinbase expansion plans on the line
UPI is an instant banking facility for real-time fund transfer under the National Payments Corporation of India (NPCI). While the NPCI or the RBI has not released any official advisory against the use of the payments mechanism for crypto trades, the regulators have refrained from extending their support to the domain in India.
NPCI had said in April that it was “not aware of any crypto exchange” using its instant payment system despite Coinbase categorically launching in India enabling the UPI option.
Armstrong’s statement also reaffirms RBI’s hard position against crypto assets. In the past, Governor Shaktikanta Das had raised potential risks of the crypto sector, both for the investors and for the larger stability of the financial sector.
Therefore, despite the apex bank setting aside the RBI-imposed crypto ban of 2018, looks like the watchdog has kept the sector in a “shadow ban” ever since. Previously, Armstrong had questioned if this informal ban is a violation of the above-mentioned 2020 court judgment.
Armstrong also commented, “India is a unique market, in the sense that the Supreme Court has ruled that they can’t ban crypto, but there are elements in the government there, including at the Reserve Bank of India, who don’t seem to be as positive on it,”
However, despite the regulatory upheaval, Armstrong is hopeful of a return, ‘even if they’re not exactly sure how it’s going to be received,’ as per the executive. He added, “My hope is that we will be live back in India in relatively short order, along with some other countries, where we’re pursuing international expansion similarly.”
Crypto slump coupled with legislative roadblocks
Armstrong had also stated in an earlier blog post that “We have ambitious plans for India and seek to hire over 1,000 people in our India hub this year alone.”
But, the legislative crypto atmosphere in India is all but positive. The country levies heavy taxes on the virtual asset class when compared to traditional investment options. In addition, mainstream banks have kept away from offering financial services to crypto merchants.
And as far as Coinbase is concerned, its share price is now hovering near $53, down over 85% from its opening day in April 2021.
On top of weak Q1 numbers, the exchange has warned of lower volumes in Q2. According to the firm’s Q1 earnings report, only 24% of the trade volume on the platform came from retail clients.
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