How To Invest In Cryptos In India Without UPI?

On April 7, 2022, a circular by the National Payments Corporation of India (NPCI) stated that they are not aware of any crypto payments happening via Unified Payments Interface (UPI). This led to UPI platform providers withdrawing their facility from all crypto exchanges, and crypto investors could no longer use UPI payments for crypto investments. After this, several crypto exchanges blocked their payment systems and users could not invest in through these exchanges using bank methods. So, in the absence of UPI, what options do you have to trade on a crypto platform?  

Crypto Trading Without UPI  

From a security perspective, decentralised methods are considered more secure and reliable than traditional modes of payment transfer. “All the records are publicly registered anonymously on the block explorer. It's like having your bank statement open to view but without your name. This cannot be hacked or changed. You do not rely on third-party confirmations, and it works 24x7 without any holidays,” says Dileep Seinberg, founder and CEO, MuffinPay, a crypto fintech firm.  

In April, crypto exchanges in India stopped taking rupee deposits soon after Coinbase stopped taking UPI payments. But many have again started accepting rupee deposits.  

So, which are the ways in which you can trade in crypto exchanges without using UPI? “Deposits through banking channels such as IMPS (Immediate Payment Service), NEFT (National Electronic funds transfer) and RTGS (Real Time Gross Settlement) can be done,” says Sharat Chandra, vice president, research and strategy, EarthID, a Blockchain platform. 

IMPS allows instant transfer of funds within banks across India up to Rs 5 lakh. It is managed by NPCI. NEFT is an electronic payment system developed by the Reserve Bank of India (RBI). No upper or lower limits have been set; banks can decide their own limits. RTGS is a continuous and real-time settlement of fund transfers. The limits are Rs 2 lakh to Rs 20 lakh. However, the limits may be higher for certain categories of customers. Transfer charges and GST may apply on these methods.  

Apart from the three methods mentioned above, crypto investors can also use peer-to-peer (P2P) service. P2P platforms are decentralised systems that allow a buyer and a seller to communicate directly with one another without the use of a third party.  

Crypto exchanges are at present using different ways to accept payments from investors. For example, CoinDCX is using NEFT, RTGS, and P2P (DCXInsta). WazirX uses IMPS, RTGS and NEFT (in tie-up with a few banks). ZebPay allows bank transfers, IMPS, NEFT and RTGS. CoinSwitch uses P2P. 

Some investors face the issue of their crypto exchange not having a tie-up with their bank. So, Indian crypto exchanges are working with various banks, including small regional banks, to increase their reach in payment gateway facilities.  

P2P And Other Channels  

Some experts believe that P2P is a viable option for the investors in the present times. “In 2018, when RBI banned all banking channels for crypto trading, people conducted transactions on exchanges through P2P, where it is possible to use both online and offline modes. In the current scenario also, P2P can be used for crypto trading on Indian exchanges because P2P is driven by an escrow wallet, which is universally accepted and usually considered safe,” says Alok Kumar, founder and CEO of StockDaddy, an investment learning digital platform.  

In addition to P2P, Seinberg suggests two other options. One is international transfers. The crypto investor can open an account in a foreign crypto exchange where the rules are different from the ones in India. “Indians can benefit from these crypto investments, provided (the exchange and wallets) are supported by international entities,” he adds.  

Another option is of Crypto Swap, says Seinberg. Just the way there is forex conversion from one currency to another, people can invest in stable coins like Tether (USDT), Binance USD (BUSD) or USD Coin (USDC) and use those to buy other crypto assets like Ethereum (ETH), Terra (LUNA), XRP etc., using the stable coins. “This also requires holding the stable coins in crypto wallets such as MetaMask or Trust. These wallets allow movement of crypto funds to your wallet directly from another person. It works on decentralised wallet like P2P,” he adds. 

Hence, crypto investors can take relief from the fact that there are various non-UPI ways too to invest in cryptocurrencies. But before making any investment, one must be fully aware of the costs of the transfer and the legality of the mode of transfer, particularly when it comes to foreign wallets and crypto exchanges.