Just a week after the first Bitcoin (BTC) ATM in India officially opened for business, its creator and owner is under arrest. Today, the Bangalore police in the Indian state of Karnataka arrested the founder of Unocoin for installing a Bitcoin ATM in a mall.
Cryptocurrency is not illegal under Indian law, and there are no rules restricting cryptocurrency trading. So either police in Bangalore do not understand the law. More likely, however, is that the arrest has to do with banking regulators’ attempts to restrict cryptocurrency trading.
Unocoin Founder Placed Under Arrest Before Bitcoin ATM Launches
On Wednesday, police in India seized a Bitcoin ATM operated by the cryptocurrency exchange Unocoin, not to be confused with cryptocurrency UnikoinGold (UKG). They also arrested Harish BV, a co-founded of Unocoin and the man who installed the ATM.
Police said the ATM was an illegal operation. But another Unocoin co-founder, Sathvik Viswanath, spoke out about the arrest and seizure. Viswanath defended Harish BV’s actions. He reminded reporters that it is perfectly legal for Indian citizens to buy, own and sell cryptocurrency.
However, financial regulators in India have been attempting to ban or at least limit the activities of cryptocurrency exchanges throughout the country.
The Reserve Bank of India (RBI), which is the nation’s central banking authority, has already issued several bans to prevent banks from working with or providing financial services to cryptocurrency exchanges.
Unocoin’s Bitcoin ATM would have given investors a way around some of those limitations. It would have allowed them to deposit Indian rupees directly to their exchange wallets without using a bank account.
Bitcoin ATM Shutdown Highlights Legal Uncertainty About Crypto
Speaking with the Bangalore Mirror, police commissioner Alok Kumar said Unocoin was attempting to carry out illegal crypto transactions. He said Unocoin did not have the necessary licenses from the RBI or the Securities and Exchange Board of India, which it would need to process trades.
But Unocoin co-founder Viswanath disagrees. He says India’s Finance Minister, Arun Jaitley, has made it clear that regulators do not consider cryptocurrency to be a legal form of money. But because Jaitely did not specifically say “illegal,” Viswanath insists crypto is simply unregulated, not unlawful.
The debate over semantics highlights the uncertain regulatory and legal landscape for cryptocurrency in India. And that means the future of Unocoins plans for more Bitcoin ATMs in Mumbai and Delhi are currently on hold.