In perhaps one of the most shocking incidents of unfair arrest reported in Indian media, is the unfortunate arrest of the founders of India’s pioneering cryptocurrency firm Unocoin – Sathvik Vishwanath and Harish BV. Both were arrested as the company was offering ATM services without a “valid business license.”
It was the first ATM for cryptocurrencies which was installed in India. It worked on the same lines as a fiat-currency bank’s ATM. The ATM was customized for Indian consumers interested in buying and selling bitcoins.
Unocoin is a Bengaluru-based startup which has been one of the most vocal decentralized technology firms. It had been benchmarking the nation’s move towards mass adoption of the non-fiat currency with its innovative offerings and services goading the techno-literate population of the country into mass adoption of their unique virtual asset.
Banks cannot accept crypto-transactions
The central bank of India, RBI had in September last applied stringent rules disallowing affiliated banks from supporting crypto transactions. In February, banks were banned from accepting bitcoin transactions, and Indians with overseas accounts or relative’s accounts could transact in bitcoin.
One of the first and the largest exchanges in India, ZebPay has shifted its operations to crypto-friendly location, Malta, based on these strict regulations.
The arrest of the developer-founders of the indigenous cryptocoin has been unnerving and has received a caustic reaction from the shocked stakeholders of the industry.
Other coin founders flummoxed
Harsh Vakharia, the brain behind another India-based coin Etherbit asks
“Why the arrests were made when there was no consumer complaints…no loss of money…or customers defrauded?”
The startup ecosystem is yet to come to terms with the arrest and appear to be intimidating founders to experiment and innovate in emerging technologies in India.
According to one of the veterans in mobile-technologies and the founder of Qikpod, Ravi Gururaj,
“Innovation only happens when young startups push the boundary.”
International crypto industry players are calling the act of the government as an “overreaction” or high-handedness since the activity under consideration was not illegal, besides no criminal offense was lodged.
Perhaps the better method was to have filed a civil suit since the business did not have a “proper business license.”
Crypto-business does not have necessary permits for operating
Though the latest incident of fiat-to-non-fiat currency ATM does not warrant the arrest of the founders, the bottom-line is that these businesses typically do not have a license. Such permissions are necessary for running an activity related to fintechnology, digital wallets, and even Non-banking Financial service providers.
Businesses do not have a license to operate since the latest government rules set by the Finance Department consider cryptocurrency as an unregulated sector. Therefore, customers continue to be under risk, when transacting with such agencies.
The most affected in the entire decentralized technology business environment are the exchanges. These trading platforms now fear the worst, as the government’s aggressive action of arresting a business operator will open more avenues for other departments to harass them and eventually pressurize them into closing operations.