{"id":13209,"date":"2021-11-09T22:30:00","date_gmt":"2021-11-09T22:30:00","guid":{"rendered":"http:\/\/ci0291d79660002559"},"modified":"2021-11-09T22:30:00","modified_gmt":"2021-11-09T22:30:00","slug":"india-regulatory-clarity-bitcoin","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/india-regulatory-clarity-bitcoin","title":{"rendered":"Will India Create Regulatory Clarity For Bitcoin?"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p>Indian founders working on bitcoin exchanges and traders face a whole gamut of questions every day, ranging from \u201cWill I be arrested?\u201d to \u201cWill my company be shut down?\u201d to \u201cWill my bank accounts be frozen?\u201d Understanding the country&#8217;s regulations and navigating the legal roller coaster can be tricky. To illustrate, the following timeline of events pertaining to the country&#8217;s stance on regulating bitcoin from the past couple of years is revealing.<\/p>\n<p>In 2018, the Reserve Bank of India (RBI)<a href=\"https:\/\/rbidocs.rbi.org.in\/rdocs\/notification\/PDFs\/NOTI15465B741A10B0E45E896C62A9C83AB938F.PDF\" target=\"_blank\" rel=\"noopener\"> announced<\/a> to all its regulated entities, including banks, to cease services to individuals and businesses dealing with bitcoin and other virtual currencies. Following this, in October 2018, the founders of<a href=\"https:\/\/www.unocoin.com\/\" target=\"_blank\" rel=\"noopener\"> Unocoin<\/a> were<a href=\"https:\/\/qz.com\/india\/1441787\/how-unocoin-founders-were-arrested-for-their-cryptocurrency-atm\/\" target=\"_blank\" rel=\"noopener\"> arrested<\/a> by the Central Crime Branch (CCB) for setting up a kiosk in a mall. The kiosk allowed cash deposits in exchange for bitcoin. Calling it a Bitcoin &#8220;ATM&#8221; sparked confusion as ATMs need a banking regulator&#8217;s approval.<\/p>\n<p>Unocoin&#8217;s founders and others working in the space fought long and hard. After fighting the case for more than two years, on February 19, 2021, following a Supreme Court decision, the Karnataka High Court declared the First Information Report (FIR) against them invalid.<a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/high-court-relief-for-duo-who-set-up-bitcoin-atm\/articleshow\/81102448.cms\" target=\"_blank\" rel=\"noopener\"> Recounting his experience<\/a>,<a href=\"https:\/\/twitter.com\/sathvikv\" target=\"_blank\" rel=\"noopener\"> Sathvik Vishwanath<\/a>, Unocoin&#8217;s CEO, said, &#8220;This legal mishap was no less than a war and having cleared our stance feels like attaining victory.&#8221;<\/p>\n<p>What appeared to be a significant sign of progress came in the form of<a href=\"https:\/\/rbi.org.in\/Scripts\/NotificationUser.aspx?Id=12103&amp;Mode=0\" target=\"_blank\" rel=\"noopener\"> RBI&#8217;s circular<\/a>, on May 31, 2021, to regulated entities altering its aforementioned 2018 stance. The new circular asked the banks to no longer caution customers dealing with bitcoin and other cryptocurrencies.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Customer Due Diligence for transactions in Virtual Currencies (VC)<a href=\"https:\/\/t.co\/iAUAx8KpRh\">https:\/\/t.co\/iAUAx8KpRh<\/a><\/p>\n<p>&mdash; ReserveBankOfIndia (@RBI) <a href=\"https:\/\/twitter.com\/RBI\/status\/1399355245566648321?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"noopener\">May 31, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Shortly after, on June 11, 2021,<a href=\"https:\/\/wazirx.com\/\" target=\"_blank\" rel=\"noopener\"> WazirX<\/a>, a leading bitcoin exchange in India, received a<a href=\"https:\/\/www.businesstoday.in\/current\/economy-politics\/ed-issues-show-cause-notice-to-wazirx-for-crypto-transactions-of-rs-2790-crore\/story\/441417.html\" target=\"_blank\" rel=\"noopener\"> show-cause notice<\/a> from The Enforcement Directorate. For transactions worth $380 million, the directors of WazirX received the notice under the Foreign Exchange Management Act (FEMA). To this day,<a href=\"https:\/\/twitter.com\/NischalShetty\" target=\"_blank\" rel=\"noopener\"> Nischal Shetty<\/a>, the founder of WazirX, has been tweeting every single day for 1086 days urging authorities to notice bitcoin and legalize the movement.<\/p>\n<p>However, a lot has changed between those two incidents. While the arrests of Unocoin founders were due to a lack of understanding, the show-cause notice sent to WazirX displayed a much better understanding \u2014 the nuanced articulation of issues with transaction details and AML\/KYC processes by the government officials showed promise. Recently, news that RBI may<a href=\"https:\/\/www.cnbc.com\/2021\/08\/27\/india-central-bank-rbi-digital-rupee-trials-could-begin-by-december.html\" target=\"_blank\" rel=\"noopener\"> launch a digital rupee<\/a> trial program by December demonstrates that the government is taking significant steps to not only understand bitcoin but also create its own central bank digital currency (CBDC).<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Central Bank Digital Currency \u2013 Is This the Future of Money: Keynote address delivered by Shri T Rabi Sankar, Deputy Governor, Reserve Bank of India, on July 22, 2021 at the webinar organised by the Vidhi Centre for Legal Policy, New Delhi<a href=\"https:\/\/t.co\/75MMrIZaxT\">https:\/\/t.co\/75MMrIZaxT<\/a><\/p>\n<p>&mdash; ReserveBankOfIndia (@RBI) <a href=\"https:\/\/twitter.com\/RBI\/status\/1418197907409227781?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"noopener\">July 22, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>That said, if you zoom out and observe, there&#8217;s a common thread that runs all along these instances \u2014 the Indian government&#8217;s disdain for lack of control. This is evident from WazirX&#8217;s show-cause notice citing the inability to audit transactions, and the dissatisfaction with the due diligence processes stating lack of physical verification. In fact, India has a<a href=\"https:\/\/en.wikipedia.org\/wiki\/Licence_Raj\" target=\"_blank\" rel=\"noopener\"> long history<\/a> that depicts their characteristic disdain. But, where it is most obvious is how India&#8217;s new social regulations want social media apps to<a href=\"https:\/\/www.businessinsider.in\/tech\/apps\/news\/whatsapp-signal-and-telegram-face-a-catch-22-situation-as-indias-new-social-media-rules-threaten-encryption\/articleshow\/81221070.cms\" target=\"_blank\" rel=\"noopener\"> break encryption<\/a> and trace chats, whichs directly violates people&#8217;s right to privacy. In response to these regulations,<a href=\"https:\/\/techcrunch.com\/2021\/05\/25\/whatsapp-sues-india-government\/\" target=\"_blank\" rel=\"noopener\"> WhatsApp<\/a> sued the Indian government over new privacy rules.<\/p>\n<p>In February 2021, Twitter had to block 500+ accounts and<a href=\"https:\/\/www.thehindu.com\/news\/national\/govt-asks-twitter-to-remove-1178-accounts\/article33779065.ece\" target=\"_blank\" rel=\"noopener\"> remove nearly 1,178<\/a> others for tweeting about farmers&#8217; protests. In April, Facebook, Instagram, and Twitter were asked to<a href=\"https:\/\/www.nytimes.com\/2021\/04\/25\/business\/india-covid19-twitter-facebook.html\" target=\"_blank\" rel=\"noopener\"> take down nearly 100 posts<\/a> that included opposition politicians calling for the prime minister of the country, Narenda Modi, to resign. In May, Twitter<a href=\"https:\/\/www.nytimes.com\/2021\/05\/27\/technology\/india-twitter.html\" target=\"_blank\" rel=\"noopener\"> received a notice<\/a> of noncompliance and was asked to take down critical content about the government&#8217;s response to coronavirus. Twitter executives were directly under fire by Modi&#8217;s government as they potentially faced up to seven years of imprisonment. The situation was so intense that the<a href=\"https:\/\/techcrunch.com\/2021\/05\/24\/delhi-police-run-by-indias-central-government-raids-twitter-offices-over-manipulated-label\/\" target=\"_blank\" rel=\"noopener\"> police in Delhi visited<\/a> Twitter offices citing concerns over \u201cmanipulated media.\u201d The trend only seems to escalate.<\/p>\n<p>And last year,<a href=\"https:\/\/www.indiatvnews.com\/technology\/news-list-of-all-chinese-apps-banned-in-india-2020-667131\" target=\"_blank\" rel=\"noopener\"> 267 Chinese apps<\/a> \u2014 including TikTok, WeChat, AliExpress, Baidu and Meitu \u2014 were<a href=\"https:\/\/techcrunch.com\/2020\/06\/29\/india-bans-tiktok-dozens-of-other-chinese-apps\/\" target=\"_blank\" rel=\"noopener\"> banned<\/a> by the Indian government. It was claimed that they engaged in activities that threatened the national security and integrity of India.<\/p>\n<p>Regulating social media, banning apps, and tracing chats are directly in stark contrast with bitcoin&#8217;s fundamental ethos \u2014 decentralization of power, freedom, and privacy. While RBI&#8217;s recent circular and CBDC plans come across as a beacon of light, there still appears to be a long journey ahead from the current legal ambiguity in India to a stable promised land for bitcoin to flourish.<\/p>\n<p>But, that is all the more reason for the bitcoin community to toughen up and champion the movement with relentless focus. The change in regulation is not merely a legal battle but a war between two ideologies \u2014 centralized authority with control, versus decentralization of power. And it is not going to be easy to win this one. As Mahatma Gandhi says, &#8220;First they ignore you, then they laugh at you, then they fight you, and then you win.&#8221;<\/p>\n<p>In the case of India, while the government may take its due time forming its regulation around bitcoin, the public needs to note that it is not<a href=\"https:\/\/balajis.com\/how-india-legalizes-crypto\/\" target=\"_blank\" rel=\"noopener\"> technically, socially, or politically feasible<\/a> to ban bitcoin in India. Moreover, curbing bitcoin could only mean the country losing trillions in gross domestic product growth.<\/p>\n<p>On the contrary, a country with<a href=\"https:\/\/dazeinfo.com\/2019\/04\/20\/number-of-reliance-jio-subscribers-graphfarm\/\" target=\"_blank\" rel=\"noopener\"> 410 million<\/a> recently-<a href=\"https:\/\/www.pymnts.com\/news\/international\/2020\/reliance-jio-surpasses-400m-subscribers-as-it-ponders-heading-west\/#:~:text=Reliance%20Jio%20Surpasses%20400M%20Subscribers%20As%20It%20Ponders%20Heading%20West&amp;text=India&#039;s%20telecom%20giant%20Reliance%20Jio,30\" target=\"_blank\" rel=\"noopener\">minted Internet users<\/a> has much to gain from legalizing bitcoin. Balaji&#8217;s<a href=\"https:\/\/balajis.com\/why-india-should-buy-bitcoin\/\" target=\"_blank\" rel=\"noopener\"> <em>&#8220;Why India Should Buy Bitcoin&#8221;<\/em><\/a> is a great primer on how India adopting bitcoin would strengthen the country on multiple facets \u2014 economy, technology, foreign policy, national security, global exports, and capital.<\/p>\n<p><em>This is a guest post by Sunil Tej. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or <\/em>Bitcoin Magazine<em>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Perhaps plans around the digital rupee will enlighten India\u2019s government, helping the legal stance of builders for bitcoin.<\/p>\n","protected":false},"author":3181,"featured_media":10814,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[1037,126,1831,219],"class_list":{"0":"post-13209","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-cbdc","9":"tag-india","10":"tag-martys-bent","11":"tag-regulation"},"author_data":{"id":3181,"name":"Sunil Tej","nicename":"sunil-tej","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/b61baf1c526fc022459761a333b48308b11347c8eaf4a02645276c4dbb7917e4?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/finance-minister-india-has-no-cryptocurrency-ban.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/13209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3181"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=13209"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/13209\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/10814"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=13209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=13209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=13209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}