It’s Official: India to Legalize Bitcoin Soon

Posted on July 20, 2017 | by [email protected]

Like others around the world, the Indian government has had its initial reservations about bitcoin and other cryptocurrencies. The country’s reserve bank on several occasions has issued warnings to the public on cryptocurrency use risk.

Even with these warnings, bitcoin adoption in the country only grew. Things came to a head on November 8, 2016. Prime Minister Narendra Modi decreed that Rs 500 and Rs 1,000, the largest denomination currency notes, were no longer legal tender.

The following day long queues formed outside banks and government owned gas pumps as people tried to convert the now useless notes to smaller denominations. That pushed even more Indians to hold and buy bitcoin.

The Bitcoin Taskforce

In March 2017, Kirit Somaiya, a Member of Parliament of the ruling BJP party, wrote to the reserve bank of India, the ministry of finance and the Securities and Exchange Board of India (SEBI). He wanted an urgent study done about bitcoin and its use in the country. Kirit:

“The use of Bitcoin, a hypothetical currency, is increasing at a rapid speed in India as well as in the world….there is urgent need to have a study on the development of Bitcoin in India.”

In early April 2017, the government formed a taskforce to look into bitcoin and other digital currencies. The taskforce’s mandate included formulating a framework that would guide industry regulation.

Members of public and other stakeholders were invited to give opinion. On MyGov, the official government portal, close to 4000 submissions were made and the majority were in support of legalizing bitcoin in India.

The Digital Asset and Blockchain Foundation of India, a non-profit organization that represents local bitcoin businesses, is one of the entities that sought audience with the taskforce.

Change of Heart

As the regulators got more enlightened about cryptocurrencies, in particular, through the work of the taskforce, their stand softened. In fact, the Asian country is now on the path to joining countries like Japan, Australia and South Korea that have in the recent past recognised bitcoin as a digital asset or a private currency.

On July 13, CoinDesk reported that India is considering imposing goods-and-services tax on bitcoin purchases. This is a far position from the push that some elements in the government made to have the cryptocurrency banned. An official:

“The discussion on whether crypto-currencies should be banned or regulated has been on for some time. The pros and cons for both aspects were put forth in the meeting chaired by Finance Minister Arun Jaitley last month.”

The tax on bitcoin purchases will be the first step to industry regulation. Most bitcoin companies operating in India such as exchanges and remittance services have long self-regulated.

They have observed the Know Your Customer (KYC) and anti-money laundering (AML) requirements. Therefore there will be little impact on how they operate when the regulator starts having a closer look at their operations.

Bitcoin’s legalization in India is critical and will have a significant network effect. India has the second largest population after China. It also has one of the largest unbanked populations. Bitcoin could be the technology that brings millions of Indians to financial inclusivity.

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Indian Government seeks Public opinion on how Bitcoin should be Regulated

Posted on May 30, 2017 | by [email protected]

In India, the government is asking ordinary citizens on how they want Bitcoin to be regulated in the country. This will, according to the government, help the country to formulate a regulatory framework for all digital currencies including Bitcoin.

The Indian government through the ministry of finance recently announced that members of the public are invited to submit their views regarding digital currency. The website mygov.in which was designed, developed and hosted by the National Informatics Center under the Ministry of Electronics and information Technology is where Indians or people living in India can give their views on digital currency. The government set a deadline of May 31st, 2017, for the last submissions to be made.

What really does the Indian Government wants to inquire through Mygov.in

A quick look at the mygov.in website we came across the main queries of the website which clearly state, “should digital currency be banned, Regulated or Observed?”. This is the first question asked in a series of questions on the mygov.in website. The website continues asking a series of questions depending on what the user of the site chose before. It seems like the government has not made up their mind on whether digital currency should be legalized in India or be banned. However, previously Reserve Bank of India said they are not monitoring the cryptocurrencies yet and maintained a neutral stand. We cannot conclude that the Indian Government’s intentions are to ban the currency as it is allowing the majority to decide what’s good for them.

Is It really Possible to Completely Ban Digital Currencies in India?

This is a million dollar questions which has already been asked by millions of people across the world. The naked answer, however, remains a complete No. Digital currencies are peer to peer in nature meaning that a user does not need authority for access from a third party before a transaction in digital currency can be completed. There are sophisticated technologies at government disposal but in 2017 none of these censorship technologies can stop such a decentralized system. Hence the step can be seen as Government’s acknowledgment that cryptocurrencies are here to stay and rather than banning them, they are trying to regulate them.

What is really wrong with Digital Currency that a lot of Nations want it regulated or banned.

Bitcoin and other digital currencies have had mixed reactions from many governments across the globe since their inception. Some governments embraced the development and deployed it into their systems. These governments also helped improve digital currencies mostly on security grounds. However, some governments have tried to block the digital currencies in their territories. This has been a futile attempt without any positive results solidly because of the nature of technology available at the reach of a common citizen.

Indian Government forms committee to examine framework for Bitcoin: Bitcoin most likely to be made legal

Posted on April 15, 2017 | by [email protected]

India has never legally banned Bitcoin or other cryptocurrencies but traditionally employed a hands off approach towards them. They have always maintained that they are not currently versed with the technology required to monitor digital currencies and would take sufficient time before formulating a framework that enables them to do so. With increasing Bitcoin volumes on Indian exchanges and circulating petitions to legalize Bitcoin, the Indian Government has now been put in a position where inventing a framework to regulate Bitcoin has now become a necessity. Let’s look into how Indian Government is planning to formulate the framework:

The perfect set-up:

In November 2016, when the Prime Minister of India banned higher denomination currency notes and took a good couple of months before bringing new denomination into circulation. During this period, the government’s initiative has been to motivate the populous into shifting more towards digital payments. Digital payments application companies that enable micropayments like Paytm and Freecharge have enabled this transition and helped for more centralized regulation of transactions. However, a byproduct of this move was the rise of Bitcoin transactions within and in and out of the country. The BTCINR trading prices were over 20% than the premium depicting the boost the cryptocurrency received during this period. This has laid down the foundation for consistent adoption of Bitcoin in India and forced the government into finding ways to regulate it.

The proposed committee:

The Inter-disciplinary committee established by the Indian Government includes the Central Bank, prominent members from the ministry of Finance and other prominent financial bodies to delve into the framework requirements of Bitcoin regulation. Earlier in February, India’s Bitcoin ecosystem consisting of young companies and Bitcoin businesses established a private self-regulatory body to proactively prevent illegal use of the cryptocurrency. The formed government committee would produce a report on Bitcoin basing on the underlying technology, its usage in India and regulations across the world. If India goes down the path of legalizing Bitcoin, it would be a valuable addition to the Bitcoin adoption space. The Asian Bitcoin ecosystem is already enriched with Japan and Philippines embracing the cryptocurrency and giving it a legal status. With Russia and India looking forward to regulate the cryptocurrency, things seem very positive for the cryptocurrency.

Task order for the committee:

The announcement from the Indian Government had the following excerpt:

“The circulation of Virtual Currencies which are also known as Digital/Crypto Currencies has been a cause of concern….Reserve Bank of India [the country’s central bank] had also cautioned the users, holders and traders of Virtual currencies (VCs) including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.”

The task order laid out for the committee in the next three months are as follows:

Checking on the present status of Virtual Currencies both in India and globally
Examining the existing global regulatory and legal rules of compliance governing Virtual Currencies
Suggest measures for dealing with such Virtual Currencies in areas such as consumer protection, money laundering, etc; and
Examine any other matter related to Virtual Currencies which may be relevant.

Bitcoin Businesses in India Petition to Make Bitcoin Legal, Can India Become the Next China?

Posted on April 4, 2017 | by [email protected]

India is a country with a good amount of smartphone and technology penetration. Traditionally, India has been the back office for most of the multinational companies owing to its time zone advantage, cheap and skilled labor and diligent technical skills. With the recent outburst of cheap and affordable smartphones in India, there has been a good amount of smartphone penetration leading most of the upcoming Indian e-commerce startups to go completely app-based rather than investing much on the traditional website. India is potentially one of the countries where with a good amount of adoption, Bitcoin volumes can inflate exponentially. However, the Reserve Bank of India has had a neutral standpoint towards the digital currencies. RBI has stated that they are not regulating Bitcoin or other cryptocurrencies yet and would like to observe and understand the technology better before adoption. However, Bitcoin businesses in India have filed a petition to make Bitcoin legal. Let’s dive into the details of the petition and the impending effects.

Bitcoin booms in India

While Bitcoin transactions in India initially were considerably low, Bitcoin mining activity has been very high since 2012. GB Miners group have 9% hashing power of the Bitcoin network, paralleling their western counterparst, making them the largest Bitcoin mining group in the country. With the Indian Government’s demonetization move, the country was forced to go cashless and this saw a rise in Bitcoin transactions and Bitcoin prices. The demonetization ended at the start of 2017, but the effects are still persistent with lower cash withdrawals being observed at banks and ATMs. This has built the required momentum for Bitcoin adoption in India.

The petition

The petition comes at a time when Bitcoin is making regional headlines due to statements from policymakers and politicians who have raised concerns about the lack of regulation surrounding the bitcoin industry. As the government is sticking to the hands off approach, big players in the Indian bitcoin industry who welcome regulation have banded together to launch a self-regulatory body to ensure adherence to KYC and AML norms called The Digital Asset and Blockchain Foundation of India (DABFI). DABFI has launched a petition calling for the explicit legality of bitcoin and other cryptocurrencies in the country. Their main motive is to develop an amicable environment for the development of Bitcoin and other cryptocurrencies.

What can India do to Bitcoin?

India is the second most populated country in the world relying heavily on micropayments. This is especially true for the small scale and medium industries that play a vital role in the country’s economy. With sustained adoption, Indian Bitcoin adoption can be a game changer for the cryptocurrency. Unlike China where the Bitcoin is only now a speculative vehicle, India can do justice to the true stature of Bitcoin and nurture the currencies through large scale adoption and eventually using its massively brilliant technical force for Bitcoin engineering. The verdict for Bitcoin’s legality in India might be set sometime in April. How the Indian government’s judgment would impact Bitcoin is to be seen.

Bitcoin is Too Big for China to Kill

Posted on January 19, 2017 | by [email protected]

Bitcoin investors have had it rough in the last couple of weeks after the cryptocurrency crashed from its near all-time highs. The main reason behind the decline in the price of Bitcoin was rising apprehension that China might move to halt the demand for Bitcoin it its economy. China is one of the markets where Bitcoin enjoys a broad-based early adoption, but the government’s recent effort to tackle money laundering and capital outflows makes the outlook for Bitcoin gloomy in the country.

Interestingly, many investors didn’t wait to examine the fundamental reasons supporting the rally in Bitcoin and they rushed for the exits at the first sign of trouble from China. However, China might be one of Bitcoin’s biggest markets but it is not Bitcoin’s only market. This article explores some of the reasons Bitcoin’s global broad-based demand won’t be eroded just because China wants to regulate the cryptocurrency.

Bitcoin’s adoption and growth is not dependent on China

China is a big market for Bitcoin and it has dominance in the volume of Bitcoin mining activities within its borders. However, many investors are erroneously mistaking the volume of Bitcoin trade in China for its leadership in Bitcoin’s global total addressable market share. However, the fact remains that at the core of Bitcoin’s decentralized philosophy is an intentional move to ensure that no single country is able to control the value of Bitcoin.

Hence, China might have a large number of Bitcoin users but it can’t dictate the terms of use for “Bitcoineers” globally. Matej Michalko, CEO of Decent observes that “Bitcoin is a global currency, not dependent on the single economy, no matter how powerful it is. China’s willingness to put effort on Bitcoin trading should encourage other countries to adapt their legislature in favor of a more flexible approach to cryptocurrencies.”

India and Venezuela are some of the populous economies with a growing demand for the use of Bitcoin. Hence, even if China decides to close down all the Bitcoin exchanges in the country, the move could have short-term effects in reducing the value of Bitcoin but the move won’t be enough to shut down the value proposition that Bitcoin already has globally.

China’s current efforts might push for a wider adoption of Bitcoin

In the first few days of 2017, Bitcoin was trading around $1,134 before China made some moves that triggered a decline last week – Bitcoin now trades around $829. Critics of Bitcoin might want to gloat over the marked decline in the value of the cryptocurrency. However, the fact remains that the decline might turn out to be a blessing in disguise in fuelling the increase adoption of Bitcoin in the global markets.

To start with, investors often love to “buy low” and “sell high”; hence, the $1,034 trading price of Bitcoin at the start of the year priced out many potential investors from the market. However, Bitcoin seems to have found support around the $800 mark in the last couple of days; hence, it shouldn’t fall lower unless there’s another cataclysmal event in the news. In essence, many more investors would be willing to buy Bitcoin now that its price is manageable around $800 in anticipation of booking gains in the next rally in the cryptocurrency.

Did India and Venezuela together power the Bitcoin Bull Run?

Posted on January 13, 2017 | by [email protected]

From Mid 2016 Bitcoin has been forming higher highs and higher lows every month making the market overtly trendy. With Yuan devaluation helping the cause, Bitcoin prices were soaring high with ample opportunities for investing. The continuous rise in prices and reasonably acceptable volatility made Bitcoin one of the best performing assets of 2016. Perceivably, majority of the people believed that China was responsible for the steady increase in prices. But was that really the case? Apart from the visible factors, there were other global drivers of adoption that helped the cause. Let’s dive into what we believe are two major factors that pulled in the volumes:

Indian Demonetization:

Prime Minister Modi sought to fight corruption, a widespread problem in India, by pulling out higher denomination bills from circulation. Considering the country’s largely unbanked population, it was a brave move. During this phase, the government tried actively to pursue a cashless society while pushing for digital wallets and transactions. Many Bitcoin startups including Unocoin, Zebay and Buyucoin have experienced a surge in their transactions owing to the policy. This has set up the stage for the growth of Fintech startups in India and has put Bitcoin into motion. The transactions from the subcontinent contributed heavily to the boost Bitcoin has received towards the fag end of 2016.

Venezuela’s inflation:

Venezuela is one country that has received a knockout blow from the economic crisis of 2008 followed by the oil slum of 2014. The once prosperous oil-rich country is now struggling to provide citizens with the most basic needs of life. The 100-bolívar note is worthless because it is worth less than $0.03 outside of the government’s pricing system. Most people have in fact started weighing the notes instead of counting them to barter for its worth. Owing to this and to introduce higher currency notes that would have value and power of purchase, government is all set to withdraw 100 bolivar notes. This transition was the opening Bitcoin needed to etch its place in the heart of Venezuela’s economy.

How Bitcoin gained:

Both demonetization in India and hyperinflation in Venezuela had a serious side effect on the population. It undermined public confidence in national currencies as store of wealth. As in the case of any hyperinflation cycle, public has resorted to holding foreign currencies that are stable. While they have an array of varied options, Gold and Bitcoin stood out as safe assets. While Gold cannot be handled with ease, owing to Bitcoins ease of use, the currency saw inflow of funds from different phases that ended up powering the bull run.

Defying fundamentals: Yuan drops but Bitcoin remains stable, Ethereum to benefit?

Posted on January 10, 2017 | by [email protected]

Start of the year and the behavior of Bitcoin has been surprising people around the Globe. A sudden halt to the trend, as the price reached the peak and now most unexpectedly the price is unaffected when Yuan is dropping. ‘Bitcoin Trading-101’ would any day tell you to keep an eye on China and Yuan for hints about price movements. This held well until the start of New Year but suddenly has become a futile pro tip. Institutional Investors and Intraday traders are all baffled by this anamoly. Let’s dive deep into understanding how exactly Bitcoin dynamics have changed w.r.t China:

China’s rumored desperate attempt and failure:

While the Bitcoin price was soaring, US dollar was at a three week low strengthening Yuan. China has plans to devalue Yuan further to 7.15% from 6.8125% this year to maintain good returns on exports. But with Yuan strengthening organically, rumors were floating in the market that China might order their state-owned companies to sell their foreign reserves. However while these might be just rumors effecting the market, Yuan devalued further and this time Bitcoin prices have remained stable.

Strong Capital controls taking the steering?

The Chinese authorities have closely monitored Bitcoin in 2016 to control and curb corruption that is hampering their economy. After gathering sufficient information, they have concluded that investors are using Bitcoin to send the money out of the country. China as such has strong capital controls and conversion of local currency into foreign currency is well regulated. However Bitcoin having a peer to peer nature and doesn’t get accounted in these regulations. Hence Chinese authorities have employed strict capital controls over Bitcoin. These measures require identification and completion of detailed forms to convert yuan into Bitcoin. With Yuan’s fall not boosting Bitcoin price, one might suspect that these controls are in place and functional.

Who will benefit from this?

If China slowly fades out from Bitcoin scenario as major driver of price and volumes, next in line would be India. With a large population that recently underwent demonetization and has been adopting Bitcoin and digital payments, India can be the next big player in Bitcoin. The budding digital currencies and blockchain startup scenario in India is surely promising in this prospect.

While Bitcoin price has remained stable in between $900-$910, Ethereum is experiencing an unusual price surge with Yuan devaluation. If it’s the case where the Chinese are now moving funds to Ethereum then it’s only a matter of time before the Chinese government realizes it. This would put all cryptocurrencies in a position to endure complete regulation in China.

Bitcoin is tipping the scales in the Remittance Industry: Mexico and Philippines experience heavy adoption

Posted on January 6, 2017 | by [email protected]

‘Borderless’, ‘Peer to Peer’ and ‘Low transactional charges’- prime attributes of Bitcoin that has made its adoption conceivable. Interestingly these are the factors that helped the cryptocurrency to find its place in Remittances Industry. The fact that transactions of high orders are executed within no time at very low transactional costs has caught the attention of many remittance providers. Banking on the same many cryptocurrency based remittance startups have popped up especially in Eastern part of the world. Let’s look into how Bitcoin is disrupting remittance industry:

Remittance Industry Overview:

A remittance is a transfer of money by a foreign worker to an individual in his or her home country. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers’ remittances are a significant part of international capital flows, especially with regard to labour-exporting countries. From the start of this decade India, China, Mexico and Philippines have been the top countries in terms of remittance inflows. Owing to this the remittance startup scenario in South East Asia and Mexico has improved significantly with a touch of cryptocurrencies.

Existing players in fiat currencies:

When it comes to cross border transfer of fiat currencies, there is a standard transaction fee which varies with different countries to carry out the transaction. Most notable companies in this space include Western Union, Money Gram, Ria, TransferWise and World Remit. These companies are pretty old and exist in more than 110 countries making Remittances easy with short processing hours. The volume of transfers of these companies is estimated to be around $750 million per month.

Upcoming Bitcoin based remittances startups:

To capture the remittances market, many Bitcoin startups have come into existence locally in these countries with varied services. FlexM, Fastacash, Sendah, Rebit, Bitspark and Toast are notable startups in South East Asia that have been actively facilitating Bitcoin remittances. Few of these startups also provide facilities of storage in the form of Gold tokens, precious metals and other assets. When it comes to Mexico, chunk of these remittances are estimated to come from US across the border. Bitso and Vogel are two mainstream Bitcoin exchanges in Mexico that offer wallet and merchant services in addition to Bitcoin Trading. They have reported a significant rise in Bitcoin transactions and cross border payments. How Mexican Government would react to the growing popularity of Bitcoin through remittances is to be seen.

India Anticorruption Drive Provides Bitcoin Startups with an Environment to Thrive

Posted on November 30, 2016 | by [email protected]

Bitcoin is probably the best selling commodity in the Indian market right now. The demand for Bitcoin has soared to record highs in the last couple of days and Bitcoin currently trades at a 35% premium in India in relation to its price in the rest of the world. 1BTC trades for about $985 in India whereas 1BTC trades around $741 in the rest of the world.

Interestingly, the increase in Bitcoin adoption in India is causing cryptocurrency startups to take bolder steps to push their Bitcoin products and services in the country. This piece seeks to explore some of the latest developments in the Indian Bitcoin startup scene.

Unocoin releases Bitcoin mobile wallet for iOS and Android in India

Fresh news out of India’s crytocurrency scene shows that Unocoin has developed and launched a mobile application for its users. Unocoin is one of the leading Bitcoin exchanges in India – the startup provides a platform for buying and selling Bitcoin and it facilitate Bitcoin transactions with mainstream vendors such as Amazon in India.

The mobile wallet that Unocoin launched on iOS and Android provides Indians with an opportunity to sell, buy, send, receive, or store Bitcoin using their smartphones. Unocoin submits that it decided to launch its wallet as a nod to the widespread use of smatrphones in India as well as the impressive adoption of Bitcoin in the country.

Unocoin co-founder, Abhinad Kaseti observes that creating the mobile Bitcoin wallet is strategic because “as of now, there are more than 1 billion Indians who use mobile phones. More than 300 million people use their phones regularly for accessing the Internet. This trend is expected to go up by 56% per year.”

Unocoin is doing a great job of pushing the adoption of Bitcoin in India. Its mission is simply to “Bring Bitcoin to Billions” and the wallet app is a step in the right direction. Some of the features of the wallet includes messaging, notifications on transaction processes and confirmations, and a 24-hour price gap among other things.

Earlier this year, Unocoin unveiled a point of sale (POS) application that makes its easy for brick and mortal stores to accept Bitcoin as a form of payment. Unocoin has also raised some $1.5M during its last founding round in which it was backed by a number of domestic and international investors.

Here’s why Bitcoin is hot in India

Bitcoin is out to displace gold as an alternative asset among Indians. The first reason for the growing love affair between Indians and Bitcoin is the demonetization campaign of the Indian government as part of to curb corruption. The second reason for newfound love between Indians and Bitcoin is the government’s proposed plan to place a ban on gold imports. India is the world’s second biggest market for gold and a ban on gold import automatically forces investors to seek safe haven refuge in Bitcoin.

Unocoin – What is bitcoin? – Telugu

Featured Image Source: Beard Design

Can Indian demonetization push Bitcoin prices higher?

Posted on November 15, 2016 | by [email protected]

The Prime Minister of India played a master stroke to flush out the ‘Black Money’ holders and non-taxpayers last week. In a surprise announcement, Narendra Modi revealed that the bigger denomination bills were banned starting from that date. For people who had bills in this denomination, it became mandatory to get them exchanged at the nearest bank. Let’s look into why this was a surgical strike on black money and how this can boost Bitcoin prices:

India and Corruption:

India is a country with a population closer to 1.4 Billion. It becomes complexly difficult to monitor the tax filings for all income groups. The Indian currency has Rs 1000 and Rs 500 bills as their biggest denominations. It is estimated that most of the money that is not accounted for taxation (popularly referred to as Black money) is stored in these denominations. Hence as a first lash on the prevalent corruption, the Prime Minister recalled bills of these denominations, replacing them with newer versions of the bill. For replacing older denominations, people would have to go to banks and get the money accounted for before replacing them. This has created quite a stir and great deal of discomfort for the Indian population, but the public has responded positively to this strategy with a tolerant mindset.

For people holding huge reserves of untaxed money, it is now mandatory to account it to get value in return. Else the reserves would go waste as the replacement of the existing denominations is scheduled only till December 31^st.

Bitcoin scenario in India:

The Reserve Bank of India has taken a neutral stance towards the cryptocurrency in 2013. They proclaimed that they are closely monitoring Bitcoin and would come to a conclusion only after fully understanding the technology. With the Bitcoin ecosystem in the country developing gradually, there is a strong possibility that this might boost the adoption. Companies like Unocoin, Zebpay and other wallet services have flourished organically in a set up that has been bending more towards e-commerce. On an average there is a volume transaction of 2051 BTC on Indian exchanges.

Anticipated affects:

In 2015, when China announced capital controls, it turned out to be a boost for Bitcoin prices. Even though India doesn’t have a strong hold in the Bitcoin domain, it has a comparable population. Over the past few months, the volumes of LocalBitcoins in India has been on the rise and shown a significant rise. With this move, the population is facing great discomfort as local banks and ATMs are flooded with people in a bid to withdraw money. It is only a matter of time, before we see wallet companies partnering with franchises to provide cashless services.