Instability of Indian Crytpo Scene Grows After Arrest of Unocoin Exchange Founders
TL;DR
- Indian law enforcement recently arrested two founders of a crypto trading company, Unocoin, for installing a cryptocurrency ATM in Bengaluru.
- Reasons behind the arrest remain unclear, as owning or trading cryptocurrencies is not illegal in India.
- The situation is currently unresolved, and will likely remain that way until the Indian government makes a decision whether digital assets should be classified as illegal.
India’s crypto scene in turmoil
The cryptocurrency situation in India has always been far from perfect, but it grew even more chaotic after the recent arrest of two founders of the crypto asset trading company, Unocoin.
Ever since cryptocurrency came to India, both the RBI and the government remained unfriendly toward it. For years, the RBI issued one warning against cryptocurrency trading after another. Supposedly, their main concerns included the possibility of unlawful actions such as money laundering and financing of other illegal activities.
The situation escalated earlier this year when the RBI issued a ban on other Indian banks, preventing them from dealing with any crypto-related business. This included every aspect of the new industry, even official crypto exchanges in India. As a result, the crypto scene was instantly crippled. The exchanges and their customers alike had to find another way of conducting their businesses or be forced to shut down.
A lot of companies, such as Zebpay, announced that they are closing down soon after this. However, one company — Unocoin — seemingly found a workaround for this issue. If banks will not deal with exchanges and crypto investors, they decided to try installing crypto ATMs.
ATMs that allow crypto withdrawals are not a new thing, and numerous countries around the world are already employing them. However, the last thing that the two co-founders of Unocoin, Harish B V and Sathvik Viswanath, were expecting, was to be arrested for doing so.
Unocoin founders arrested for installing an ATM
The ATM that Unocoin founders have installed was located at a mall in Bengaluru. According to their statements, all that they wanted was to try and find an alternative method for allowing exchanges and individuals in India to continue their trading. Since trading and owning cryptocurrencies is still not illegal in India, it is still unknown why the two were arrested.
Some have suggested that the reason for the arrest might be the necessity for a license to install the machine. Other speculate that the law enforcers view cryptocurrencies as illegal, even though there is no law that explicitly claims so. At the moment, India’s crypto scene remains mostly in the gray area of the law, with no certainty what is allowed and what is not.
Unocoin officials continue to claim that the government did not categorize cryptocurrencies as illegal assets, in which case, dealing with them is not a violation of current laws.
One positive in this situation is the fact that India’s Supreme Court demanded that the government makes its stance towards cryptocurrencies official. Only days ago, they requested that the government decides within two weeks. This move came as a result of numerous petitions that crypto exchanges made after taking the RBI to court due to their decision to ban banks from dealing with crypto.
While the RBI was the one who prohibited working with crypto businesses, it never openly suggested that cryptocurrencies are illegal. Instead, it stated that the government should tackle this issue. However, until the decision is finally made, incidents such as this remain unsolved.
Furthermore, India’s citizens continue to have a strong faith in Bitcoin and other cryptocurrencies, even though investing in them is viewed as a substantial investment risk.
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