All across the globe cryptocurrency have created anxiousness and pressure on the governmental jurisdictions due to the fear of money laundering and other issues. However, many governments are trying relentlessly to safeguard investors vulnerability to fraud. This is what Japan the leading supporter of decentralized assets has recently done by confirming Japan Virtual Currency Exchange Association (JVCEA) as a legal authority and a certified fund settlement business association to gain rights for regulating the domestic exchanges. That means FSA has legally approved the cryptocurrency industry with a self-regulatory status. The overseer has granted the industry body to protect, vouchsafe, and keep under control domestic exchanges by following strict measures.
Inline Taiwan has also issued the statement on drafting and presenting the ICO rules by June 2019, in an attempt not to curb the creativity and productivity associated with cryptocurrencies. In fact, Dubai is also positive towards the new form of money for the country’s economic growth and expansion.
Surprisingly, India the land of knowledge with outshined industry cognoscenti’s seems to have incorporated xenophobia within themselves and not allowing the crypto enthusiasts to come forward become progressive and encouraging enough towards the new economic phase.
Such an example has been noticed recently with an Indian crypto exchange Unocoin on Oct. 24. The 37-year-old Harish BV, co-founder of the establishment has been arrested shortly after a week of installing an allegedly unregistered Illegal Bitcoin (BTC) ATM in Bangalore.
Harish was produced in the 1st ACMM (Additional Chief Metropolitan Magistrate). The court in Bengaluru before he was taken into police custody. The police also seized several gadgets and Rs.1.79 lakh in cash from him. The materials suddenly and forcibly hold included two laptops, one mobile, three credit cards, five debit cards, one passport, five company seals and one cryptocurrency device.
The Cyber Crime department of the Central Crime Branch (CCB) on the arrest elucidated, “The ATM has not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law.”
On Oct 14, 2018, a pivoting move by Indians towards feeding off their addiction of bitcoin and other cryptocurrency has been seen after the launch of crypto ATM kiosk in Kemp Fort Mall, Bangalore, India.
Earlier this year in Q 3 the Reserve Bank of India (RBI) declared a virtual ban that country’s banks will no longer be allowed to conduct business with cryptocurrency exchanges. Unocoin, the Indian cryptocurrency exchange, recently discovered a vulnerability that could use ATM machines to circumvent the ban and allow users to deal in Bitcoin. This means that users can completely separate their bank account from Unocoin, and as long as Unocoin has its own bank account, the sale will continue.
Although the ATM was inaugurated despite the Reserve Bank of India’s crackdown on cryptocurrency in India. There are no rules stating against the setting up of an ATM in the country. This is what Uncoin has gripped and taken an opportunity to set the booth for the convenience of the people.
Unocoin asserts that it conformed and adhered with RBI rules and claimed while relaying that it is merely attempting to accommodate “newer mechanisms and solutions to reduce the hurdle facing by the present central governments stand. Users of the erstwhile ATM could withdraw and deposit bitcoins but could not buy or sell them.”
But amid much fanfare, the Cyber Crime Police in Bengaluru has registered a case against Unocoin for setting up the ATM without permission and have also arrested the company’s co-founder.
A Sidestepping Move
Founded in 2013, Bangalore based Unocoin is India’s first entrant and one of the leading bitcoin establishments which enable Indians to buy, sell, store, use & accept Bitcoin, XRP, Ethereum, Bitcoin Cash, and Litecoin for cash — and contrariwise.
To escalate crypto-to-fiat liquidity Unocoin has launched India’s first Bitcoin ATM amidst the current banking ban by the central govt. The company also proposing to launch a network of bitcoin ATMs or kiosks across India out of which Delhi and Mumbai are on the upcoming priority.
Unocoin stated, “due to the RBI’s recent notification on ‘Prohibition on Dealing in Virtual Currencies’, our banking relationships were disrupted some time ago.”
As per the company’s averment, the approx.. customer-base is about 1.2 million which will undoubtedly increase after such an attempt to ease out the customers.
Unocoin also claims that with this ATM only Unocoin’s KYC verified customers can deposit or withdraw money, from their Unocoin or Unodax accounts. That means the users would require to use their registered Unocoin addresses for trading which can then be further used to buy cryptocurrencies from Unocoin’s website or mobile app, according to the latest tweet by the pacesetter.
However, Unocoin, persistently struggling to work within the legal framework and taking measures to restrict illegal activities, such as money laundering in compliance with India’s KYC/AML laws.
The exchange has confirmed that it would impose the current cash handling restriction as a rider to following the guidelines issued by the central bank post demonetization.
The bellwether Unocoin cleared by stating:
“Users are subject to some limits on deposits and withdrawals per transaction and per day subject to cash handling restrictions in India. The minimum amount for deposits and withdrawals is 1,000 rupees and must be in multiples of 500 rupees. Also, ATMs have nothing to do with India’s banking system and, hence, do not violate any RBI norms.”
According to the company, the set-up of the ATM network would operate independently without any banking partnerships like other ATMs. That means on a daily basis the exchange would keep inserting cash bills into the machine, and customers will be able to dispense and withdraw funds in INR cash only. The kiosk will not accept debit or credit cards as banks cannot be involved in the transaction.
So to say it will ostensibly remove the project from the grip of RBI ban that bars regulated banks to conduct businesses with crypto companies. Probably this could be the reason for their arrest.
On this Unocoin Co-founder & CEO, Sathvik Vishwanath relayed “Our ATMs do not need a banking network or relationship to work. They just work as the cash deposit and dispensing alternative for Unocoin customers.”
Unocoin Stonewalled Weighty Issues
Although Unocoin seems to have leapfrogged RBI regulations but this move violating other regulations it is not clear because it is yet to make public the modus operandi of the cash management system for these ATMs, as the money collected cannot be deposited in bank accounts under Unocoin’s name. So how this will regulate? On what grounds the income would be declared in the banks. It is still cloudy whether the function of the ATM is breaking any law or not. For the standalone customer also it could be a riskier affair if catches under a detectable scenario.
In fact, Unocoin cash management system sounds not lucid enough to explain the well-defined process of money accumulation. Does it raise another doubt of whether the money goes out of India or would stay just in that bank account? And if it will stay in the bank account how the establishment can help the people in circulation.
CryptoEnthusiasm Rising In India
With over 1 billion population India has been seen strong on something of an economic renaissance in the last few years. Such has been the extent of the country’s growth that the International Monetary Fund (IMF) has called it the fastest growing and an emerging economy. Apart from deep-rooted history and culture the country is also strongly mushrooming towards technological advancement due to the internet in the phase of globalization.
Undoubtedly, Bitcoin and other cryptocurrencies have been operating within the country for a number of years now. As early as 2012, during the primitive days in the growth of Bitcoin small-scale Bitcoin transactions were already taking place within the country by the crypto enthusiast and maniacs. In 2013, Bitcoin was beginning to gain a level of popularity and spreading across many countries. That year, a few businesses began to accept Bitcoin payment. In India, a vintage era pizza shop called Kolonial in the Worli area of Mumbai became the first restaurant service to accept Bitcoin payments.
Soon after that in a short period of time, cryptocurrency exchanges began to spring up and generated interest of the populace in the crypto market.
In fact in Nov. 2016, after the demonetization 86% of the country’s paper currency sent shockwaves all across the subcontinent of India when within 24 hours the paper currency in circulation had been rendered valueless by virtue of a single government proclamation. Realizing that fiat money isn’t exactly “real” money since it isn’t backed up by anything, Indians began to seek alternative currency models.
Due to money laundering issues, fraud, market volatility, and lack of consumer protection after the clampdown by the central bank still the situation is jittery in India.
However, cryptocurrencies became overwhelmingly popular all across the globe. The users in India have already bypassed RBI crypto curbing litigations and switched to peer-to-peer and over-the-counter trading. But this cutting-edge move is the current face-off between India’s crypto-community and it’s banking regulator which is remarkable and shows the enthusiasm and fervor among the populace.
On this Jagdish Pandya, an industry expert of more than 5 years and a founder of Singapore based firm Blockon Group sharply stated: “The crypto industry is ready for take-off in India but due to the slow government, its caught in an undertow. Now, Indians don’t want to just get involved in peripheral participation in crypto trading as far as international crypto exchange platforms are concerned. Lack of large-scale mining facilities & strict government restrictions on international money flow also makes it significantly difficult for Indians to transact with many of the large foreign crypto exchange platforms. But healthy decisions are not formulated in apprehensions. The government must come forward to formulate encouraging norms towards the decentralize phase and economic growth.”
Another example can be seen in India after Russia and China by the crypto enthusiasts and the Indian exchanges and new promising startups who are resiliently finding an alternative, innovative, and feasible ways that could function inside the grey areas of law which can allow them to trade decentralized virtual assets. Recently, Zebpay by evading Indian laws opened offices in other reliable and encouraging countries with supportive and nurturing legal structure to conduct the operations smoothly.
Also, as per the “Global Cryptocurrency Survey,” by a German research firm India is recognized at the fourth place in people trading cryptocurrencies, falling behind three countries — the US, the UK, and Japan, where trading Bitcoin is not illegal. The survey was published after the RBI ban.