Coinbase is adding support for the popular UPI payment instrument in India, making the eponymous cryptocurrency exchange functional for the first time in the world’s second largest internet market.
The publicly traded company, which began testing UPI payments a few weeks ago, made the official launch on Thursday at its first event in India and said it is expanding its product offerings in the country.
UPI, a payment infrastructure developed by a coalition of retail banks, has become the most popular way for Indians to transact online. Coinbase users in India can transfer money to and withdraw from their accounts via the UPI network, a company executive said. To incentivize customers to try the Coinbase app, the company is offering $2.65 to anyone who signs up.
Notably, the company has not disclosed the names of its banking partners for the UPI payments rollout. The vast majority of banks in India continue to scoff at crypto-related transactions, echoing the local central bank’s long-standing views on virtual digital assets.
Even when India’s Supreme Court overturned the RBI’s ban on crypto two years ago and the nation recently began taxing crypto transactions, banks are largely still following the central bank’s earlier direction. RBI officials have publicly called for more research into crypto.
T. Rabi Sankar, deputy governor of the Reserve Bank of India, claimed before an audience at a banking conference in February that cryptocurrencies “are specifically designed to circumvent the regulated financial system” and are not supported by any underlying cash flow.
“They have no intrinsic value; that they are related to Ponzi schemes, and maybe even worse,” he said.
“As a store of value, cryptocurrencies such as bitcoin have delivered impressive returns so far, but so have tulips in the 17th-century Netherlands. Cryptocurrencies are very similar to a speculative or gambling contract that works like a Ponzi scheme. It has even been argued that the original scheme devised by Charles Ponzi in 1920 is better than cryptocurrencies from a social perspective,” he said.
Coinbase has declined a request for an interview with its executives.
The arrival of Coinbase, which operates in dozens of markets, comes at an interesting time in India. Coinbase is already an investor in two of the largest local crypto exchanges in the country (CoinSwitch Kuber and CoinDCX).
New Delhi’s move to start taxing crypto income in the country last week has prompted hundreds of thousands of people to cut or shut down crypto trading, according to sources familiar with the matter.
Coinbase said it is taking a “long term” bet on India. Brian Armstrong, co-founder and chief executive of Coinbase, said the company has already invested $150 million in Indian startups and plans to more than triple its workforce in the country to 1,000 this year.
FTX, a much younger crypto exchange and increasingly a major rival to Coinbase, has also started expanding its presence in India. The venture arm of the company is partnering with a handful of startups in the country, according to a source familiar with the matter. It is also in talks to support Indian fantasy sports startup MPL, TechCrunch reported last week.