Bitbns is building a bridge, other exchanges remain wary

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But crypto exchange Bitbns via a related company called OnRamp appears to have found a roundabout solution to the problem. OnRamp has integrated UPI into its payment flows, and users can make instant transfers to choose and purchase from over 300 crypto tokens.

OnRamp is a separate entity for Bitbns but is operated by the same founding team as the exchange and has been up and running for six months.

But this is not the first time a crypto exchange has attempted to pander to UPI transactions. In April 2022, US-based crypto exchange Coinbase announced that it had enabled UPI payments as part of its launch in India. But this announcement did not go as expected by the crypto exchange. A few hours later, UPI’s governing body, the National Payments Corporation of India, issued a statement suggesting that it was not comfortable linking UPI to crypto.

A few days later, Coinbase announced that it was closing the bridge between crypto and UPI.

And now Bitbns, in an effort to solve instant money transfer issues for crypto, has resurrected it, Gaurav Dahake, Managing Director of Bitbns, told BQ Prime. “We want to put in place a more compliant process,” Dahake said, referring to their transaction flow for UPI.

Instead of using the services of a payment processing company for UPI transactions, OnRamp displays a UPI ID for a bank account with a private bank that customers are supposed to send funds to. In return, OnRamp gives them crypto tokens of their choice. OnRamp follows proper and proper KYC checks for customers using Aadhar authentication, Dahake added.

The NPCI and RBI’s stance on crypto hasn’t changed, and OnRamp just found a loophole they’re exploiting, the founder of a rival crypto exchange told BQ Prime on condition of anonymity.

While Dahake said if regulators closed that bridge, they would violate the Supreme Court’s 2020 order. The order rescinded an RBI circular prohibiting financial services institutions from offering services to crypto businesses. At the time, the Supreme Court ruled that the RBI ban violated the freedom to trade guaranteed by Article 19(1)(g) of the Indian Constitution.

“This argument is flawed,” Sharat Chandra, co-founder of the India Blockchain Forum, told BQ Prime. Banks can choose to enable or disable the services for a specific company according to their own choice, he added.

Although Bitbns has moved in this direction with OnRamp, other exchanges don’t want to hit UPI with a mast. WazirX and Unocoin have done nothing to bring UPI back for buying or selling crypto, two senior exchange executives told BQ Prime on condition of anonymity.

It will likely negatively impact everyone if regulators go sour again, a senior WazriX executive said.

On his part, Dahake believes that having a fiat-to-crypto ramp with instant payments, i.e. UPI, is crucial to ensure the growth of crypto in India. The company also plans to expand OnRamp to other jurisdictions, such as Brazil, Mexico and the United Arab Emirates, Dahake said.

However, how far its bridge in India will travel may very well depend on how regulators rate it.

Indian crypto exchanges have also been in talks with the government to formalize rules for reporting and monitoring illicit transactions, including money laundering, BQ Prime reported on Monday.

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