Regulatory Update | India's largest bank SBI prohibits crypto transactions on instant payment platform UPI

India's largest bank, State Bank of India (SBI), has banned cryptocurrency exchanges from using the country's real-time payment system, Unified Payments Interface (UPI), for receiving payments, and has instructed payment processors to disable UPI on crypto trading platforms.

According to the Indian Economic Times, cryptocurrency exchanges are unable to purchase Bitcoin or any cryptocurrency through UPI deposits due to the latest restrictions imposed by the national bank. One of India's largest cryptocurrency exchanges, Wazirx, has been affected by this ban.

Nischal Shetty, CEO of Wazirx, stated that they are still in communication with the Indian national bank and emphasized that Wazirx complies with KYC (Know Your Customer) norms and AML (Anti Money Laundering) policies, "As India's largest cryptocurrency exchange, SBI's move affects millions of Indians."

The decision by the Indian national bank came after several banks had already implemented similar bans on cryptocurrency exchanges. In May, India's largest private bank, HDFC, warned investors against trading in cryptocurrencies like Bitcoin, stating that they would increase transfer limits and even cancel bank cards. ICICI Bank also notified businesses conducting cryptocurrency transactions online to close their internet banking services.

The real-time payment system UPI was developed by the National Payments Corporation of India (NPCI) as a payment platform for mobile phones, aiming to facilitate convenience and immediacy in interbank transactions. This platform allows bank account holders to send and receive funds from their own mobile phones without entering their bank account passwords.

Regarding the policy prohibiting UPI payments for cryptocurrency transactions, a spokesperson for the Indian national bank declined to comment. It is expected that many other banks will follow suit, given the influence of the Indian national bank.

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