A curious piece of news broke earlier this week: a cryptocurrency ‘ATM,’ the first of its kind, had opened on Old Airport Road.
The kiosk was located at Kemp Fort Mall, and prompted quick stories in the press. The reports used the terms ‘cryptocurrency’ and ‘ATM’ vaguely and inaccurately, people behind the business are now saying.
Things took an unexpected turn this week. The police arrested two founders of Unocoin, the company based in Rajajinagar, that had set up the kiosk at the mall. Police said their intention was to “avert mass cheating.”
Metrolife contacted the counsel for the founders and sought details about the ‘ATM’ and the action that followed.
Swaroop, legal adviser for Unocoin, the company that set up the kiosk, says it has violated no rules.“We checked if there were any specific registrations required, or if setting up such a kiosk would be a violation of any Indian law. After understanding the situation, we went ahead,” he says. The mall is aware of what it is all about, he says. The general public referred to the kiosk as an ATM, which perhaps added to the misunderstanding and police action, Swaroop reckons.
ATMs are used for withdrawal of money from one’s own bank accounts. Unocoin provides a crypto-asset exchange, which is where the kiosk comes in. The company never termed it an ATM, he says.
Anand says crypto assets do not come within the definition or framework of the “currency, negotiable instrument or coin” regulations in the country. “Crypto assets are like tokens generated in a computer programme towards we which we ascribe notional value. There are no clear demarcations on them,” he says.
Crypto assets are not illegal in India, he avers. “There is no mechanism to regulate it but the company has not done violated any rules, says Swaroop. He refuted the police charge that the ATM was a ploy to defraud investors.
The kiosk had been set up but wasn’t operational. “There are certain bugs which we are addressing and the kiosk isn’t live yet,” he says.
The Reserve Bank has sounded a note of caution about virtual currencies.
Police say unregulated crypto assets business amounts to gambling
Girish S, DCP, says the police arrested Unocoin co-founders Harish BN and Sathvik Vishwanath as a preventive measure.
In his words: “The simple reason is that the kiosk is not regulated. There should be rules laid down by the RBI or some authority for such a business to be carried out. The company officials claim that they were just creating a platform for users -- buyers and sellers -- to trade in crypto assets.
They compared themselves to the share market. We asked them on what basis the prices were decided and they gave vague answers that they were based on international markets. They must explain or it amounts to gambling,” he told Metrolife.
The founders had no answer about what would happen if the value of the crypto assets dropped, Girish says. “When you are doing a business here, you have to validate it. Cryptocurrency is not illegal here but dealing in it is, according to RBI guidelines. We had to take these steps now before numerous citizens were cheated.”