Paytm Payments Bank will no longer allow people to buy and sell crypto assets through its platform as of Friday night if it ceases trading on cryptocurrency exchanges.
Competitor PayPal and other payment processing companies that allow cryptocurrency purchases on their platform could also pull the plug, they said.
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According to an official PayPal spokesperson, PayPal and Venmo’s crypto services are only available in the United States.
Most banks had disconnected from cryptocurrency exchanges like WazirX, BuyUCoin and Zebpay earlier this week after the Reserve Bank of India informally advised them to reconsider relationships with them.
“Paytm Payments Bank will end its EOD support tomorrow (end of the day),” the CEO of a cryptocurrency exchange told ET on Thursday.
The company had not officially given a reason for this, nor told them whether it was due to a regulatory problem, he said.
Many leading cryptocurrency exchanges told ET that a number of payment processing companies have announced their intention to withdraw support.
An email questionnaire sent to Paytm did not trigger a response at the time of going to press on Thursday. PayPal also did not respond to ET’s request.
Insiders said the RBI directed payment processing companies to stop trading cryptocurrency exchanges.
As with the banks, the central bank has not issued a written instruction to the payment gateway companies.
The RBI did not respond to an ET email inquiry sent on Thursday afternoon at press time.
Paytm’s decision to back out comes soon after cryptocurrencies, particularly Bitcoin, experienced a lot of fluctuations.
Bitcoin fell to a three-month low on Monday amid speculation that Tesla might sell its holdings in the virtual currency. The decline was also due to China banning cryptocurrency trading in the country.
This has also led to a lot of chaos on the Indian stock exchanges, insiders said.
Many investors wanted to liquidate their position and exit, but could not. The exchanges had to develop alternative mechanisms as the banks refused to deal with them.
In the past few weeks, crypto exchanges had created dedicated wallets, involved payment processing companies, and deployed banks outside of India. Some even set up “offline” payment systems that investors can use to access crypto assets.
Crypto exchanges have few options left to accept investments from Indian investors.
Industry insiders said Paytm’s decision to stop dealing with crypto exchanges is in line with the company’s ambitions to create a new Umbrella Entity (NUE) in the country.