Bangalore-based bitcoin exchange Unocoin has come back online, announcing that it will begin trading bitcoins again on 8th January.
The return comes after a series of recent events in India that threatened a government crackdown on the country’s fledgling bitcoin industry.
Unocoin launched in mid-December at the Global Bitcoin Conference in Bangalore. The well-attended conference shone a light on India, and for a couple of weeks the country looked set to become Asia’s next bitcoin star as China’s crackdown began.
At the time, the company stated that financial regulatory compliance was a priority. It was open to Indian residents only and required Indian Personal Account Number (PAN) cards to set up an account.
Timeline of events
However, within weeks bitcoin’s fortunes had reversed. On 24th December The Reserve Bank of India (RBI) joined other nations to issue a statement warning that exchanges were operating without regulatory approval. A number of exchanges suspended operations to play it safe.
On 27th December, Unocoin announced it would suspend buy-sell services and suspend user logins “for the time being.”
Following this, tax officials also visited the offices of CoinMonk, a bitcoin education and mining company under the same umbrella as Unocoin. However, the interviews were mostly positive, used to gather information on CoinMonk’s KYC compliance and technical details regarding bitcoin mining.
On 4th January, the newly-formed Bitcoins Alliance India (BAI), a bitcoin entrepreneur and advocacy group, held a press conference with international tax and corporate law expert Nishith Desai speaking on bitcoin’s behalf.
Desai said the BAI “welcomed” the Reserve Bank’s warning, adding that it was in line with other similar statements made internationally. However, he stressed that this did not mean bitcoin was or should be illegal.
Bitcoin is similar both to currency and securities, but is neither of those two things, the BAI statement continued: “At best it is a combination of protocol, data, and software program stored at multiple locations.”
“When transacted it involves some kind of bartering. If the bitcoins themselves are sold for a price in terms of ‘money’, Sale of Goods Act would apply but accepting bitcoins against goods should not attract the provisions of Sale of Goods Act.”
BAI also called on the government to recognize bitcoin’s benefits and clarify its position:
“Whether the bitcoins can be used for illegal trade is a question often asked. Yes, like any other cash it can be. But the cash is simply not traceable except by catching someone with physical possession. Bitcoins are far more traceable than money especially when traded through Bitcoin traders. BAI is committed to develop further standards of openness and transparency in collaboration with the regulators.
If properly harnessed, bitcoins in general have number of benefits:
1. Facilitates “financial inclusion” to the poor and unbanked population
2. Significantly reduces transaction costs
3. Enables the growth, ease and security of both ecommerce and physical transactions
BAI urges the government to clarify that the bitcoins are not illegal per se, however, they are saddled with number of commercial risks including its volatility, loss of hardware, digital wallet, etc.”
Unocoin announced it would restart operations after the conclusion of the press conference.
Bangalore Palace image via Shutterstock