In response to the ‘shadow ban’ on cryptocurrencies, leading banks have asked the National Payments Corporation of India (NPCI) to clear the air in a formal directive on the curbs on the use of ‘Unified Payment Interface’ to buy and sell the virtual digital assets (VDAs), reported The Economic Times.
Several banks have lately blocked Unified Payment Interface (UPI) for trading of cryptos following “verbal instructions” from NPCI which operates retail payments and settlement systems in the country, wrote The Economic Times.
The banks, some of which are shareholders of NPCI, raised the issue at a recent meeting after the payments body expressed its reservations a few weeks ago on the fund flows through UPI for crypto trades.
UPI enables a bank account holder to send and receive money from their smartphones without the need to enter bank account information or net banking user ID and password.
A formal communiqué from NPCI, however, seems unlikely anytime soon. An NPCI official told ET that there are “no intentions of any circular”.
According to senior bankers and members of the crypto community, NPCI’s reluctance probably stems from the legal complications that an official ban could result in. “If there is a formal circular to ban UPI for cryptos or VDAs, whatever is the nomenclature, the crypto industry in all likelihood would legally contest it — as they had done when the Reserve Bank of India imposed a ban in April 2018,” said a banker.