India’s disdain for crypto-currencies has continued with the arrest of the Unocoin crypto exchange co-founder and the seizure of a Bitcoin ATM this week.
It was the first Bitcoin ATM in India and was reportedly only in operation for a little more than a week. According to local media, a 37-year-old man has been arrested for running the kiosk in the Karnatakan state capital of Bengaluru, sometimes referred to as “the Silicon Valley of India”. Officers from the crime central branch who participated in the raid seized the machine in addition to two laptops, a mobile phone, several credit cards, a passport, company papers and some local currency.
Sathvik Viswanath, co-founder of Unocoin, said it was perfectly legal for Indians to buy and sell Bitcoin and crypto-currency. “We got a lot of bad press after the finance minister announced a ban in February 2018. The minister’s statement was clear: Crypto-currencies are not legal tender in India. He did not say ‘illegal tender’. There’s a huge difference. It means you bear the risk of your investment and there’s no regulation for the industry,” he told media in a rather ambiguous statement.
However, Minister of Finance and Corporate Affairs, Arun Jaitley, has long thought otherwise. “The government does not consider cryptocurrencies legal tender or coin and will take measures to eliminate use of these cryptoassets in financing illegitimate activities,” he said in his budget speech earlier this year.
What is clear is that the Indian authorities are still not keen on crypto. The Reserve Bank of India’s constant clampdowns on crypto exchanges and on bank accounts used for digital asset trading has left the industry in a shambles. The three month deadline for exchanges to petition the Supreme Court set by the RBI back in July has come and gone and restrictions are still in place. The court case has been postponed again and India’s crypto ecosystem is crumbling.
At the end of last month India’s oldest and largest exchange by volume, Zebpay, closed its doors. In a blog post at the time it said “The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities.”
Other exchanges are waiting for the Supreme Court to make a decision but hope is fading and the damage could already be done. Exchange trade volume in India has plummeted, but users have since switched to alternative methods such as peer-to-peer trading, just like their Chinese counterparts who face similar restrictions.