The Blockchain and Crypto Assets Council (BACC), India’s leading crypto advocacy body, has formally called on the National Payments Corporation of India (NPCI) to reinstate Unified Payments Interface (UPI) services for cryptocurrency exchanges across the country. In a detailed letter, BACC emphasized the importance of financial inclusion, regulatory compliance, and innovation in India’s digital economy—urging NPCI to reconsider its stance on restricting UPI access for licensed and compliant crypto platforms.
As a self-regulatory organization under the Internet and Mobile Association of India (IAMAI), BACC represents major domestic crypto exchanges such as CoinDCX, WazirX, and CoinSwitch Kuber. The council argues that many of these platforms strictly adhere to Know Your Customer (KYC), Anti-Money Laundering (AML), and other financial regulations—aligning closely with the standards expected by traditional banking institutions and payment networks.
Why UPI Access Matters for Crypto Adoption
UPI is one of India’s most widely used real-time payment systems, processing over 8 billion transactions monthly as of 2025. For retail investors, especially first-time entrants into the crypto space, UPI offers a seamless, low-cost, and user-friendly way to fund their digital asset accounts.
Restricting this access creates friction in onboarding new users and limits the growth of a regulated crypto ecosystem. BACC highlights that denying UPI services does not eliminate crypto trading—it merely pushes users toward less transparent or offshore platforms that lack local oversight.
“Cutting off UPI support under the guise of risk mitigation penalizes compliant businesses while doing little to curb actual illicit activity,” stated a spokesperson from BACC. “We’re not asking for special treatment—just fair and equitable access to payment rails like any other fintech service.”
👉 Discover how seamless crypto transactions can be with the right tools and platform support.
A Call for Dialogue, Not Disconnection
Rather than maintaining a blanket ban, BACC has proposed an open dialogue between NPCI, regulated exchanges, and financial regulators. The goal? To collaboratively identify risks, establish clear guardrails, and develop a certification mechanism for crypto platforms that meet stringent compliance benchmarks.
Such a framework could include:
- Mandatory integration with government-recognized KYC databases
- Real-time transaction monitoring systems
- Periodic audits by certified agencies
- Clear grievance redressal mechanisms for users
This approach mirrors successful models in other jurisdictions where regulated fintechs—including digital wallets and neobanks—gain conditional access to national payment infrastructures based on compliance performance.
The Case for Regulatory Clarity
India’s evolving stance on digital assets has seen both progress and setbacks. While the government introduced a 30% tax on crypto gains in 2022, it stopped short of banning the technology. Since then, industry stakeholders have pushed for clearer rules that distinguish between speculative trading and legitimate blockchain innovation.
BACC’s latest move underscores a broader demand: regulation over prohibition. By engaging with NPCI, the council aims to position crypto exchanges not as outliers but as accountable participants in India’s financial future.
Moreover, restoring UPI access could enhance traceability. On domestic platforms using UPI, every rupee inflow is linked to a verified bank account—making it easier for authorities to monitor fund flows compared to peer-to-peer (P2P) or international transfers.
Challenges Ahead
Despite strong arguments, NPCI remains cautious. Concerns about consumer protection, potential misuse of funds, and volatility in digital assets continue to influence its policies. There's also ongoing debate within regulatory circles about whether UPI—a public infrastructure subsidized by banks—should serve high-risk sectors.
However, BACC counters that risk should be managed through supervision, not exclusion. They point out that sectors like stockbroking and commodities trading also carry inherent risks but retain full access to UPI due to robust regulatory frameworks.
Frequently Asked Questions (FAQ)
Q: What is UPI and why is it important for crypto traders?
A: UPI (Unified Payments Interface) is a real-time payment system in India that allows instant bank-to-bank transfers via mobile apps. For crypto users, it simplifies depositing INR into exchange accounts, reducing barriers to entry and improving user experience.
Q: Why did NPCI block UPI services for crypto exchanges?
A: NPCI cited concerns over consumer protection, potential for fraud, and the unregulated nature of cryptocurrency markets. However, no official public order was issued—many restrictions were implemented at the bank or payment gateway level under informal guidance.
Q: Are Indian crypto exchanges compliant with financial regulations?
A: Leading platforms like CoinDCX and WazirX follow strict KYC/AML protocols and report suspicious transactions. Some have even integrated with India’s Financial Intelligence Unit (FIU) reporting systems post the 2023 anti-money laundering guidelines.
Q: Can users still buy crypto without UPI?
A: Yes, alternatives include NEFT, RTGS, IMPS, and P2P trading. However, these methods are often slower, costlier, or less intuitive than UPI—especially for novice investors.
Q: Is there a precedent for regulated access to payment systems globally?
A: Yes. Countries like Singapore, Japan, and Switzerland allow licensed crypto firms to access banking and payment rails after meeting compliance requirements—balancing innovation with oversight.
👉 See how global platforms are enabling secure and compliant crypto transactions today.
The Road Forward
BACC’s appeal marks a pivotal moment in India’s crypto policy evolution. If NPCI agrees to reopen discussions, it could pave the way for a compliance-first model where only certified exchanges gain UPI access—similar to how payment aggregators are vetted today.
Such a system would benefit all stakeholders:
- Consumers get safer, faster onboarding
- Exchanges operate in a level playing field
- Regulators gain better visibility into transaction flows
- NPCI maintains control over risk exposure
With over 15 million active crypto users in India and rising interest in blockchain technology, the need for balanced regulation has never been greater.
Final Thoughts
The debate isn’t just about payments—it’s about inclusion. Excluding an entire sector from core financial infrastructure risks stifling innovation and pushing activity underground. BACC’s proposal offers a pragmatic middle ground: restore access conditionally, monitor closely, and build trust incrementally.
As India positions itself as a global leader in digital public infrastructure—from UPI to Aadhaar—the integration of responsible crypto practices could be the next logical step.
Core Keywords:
- Crypto advocacy
- UPI services
- NPCI
- Blockchain and Crypto Assets Council (BACC)
- Indian crypto exchanges
- KYC compliance
- Digital payments
- Financial inclusion