Bitcoins prepare a second coming in India
By Jayadevan PK, ET Bureau | 22 Jul, 2014, 12.39PM ISTPost a Comment
BANGALORE: After major setbacks, Bitcoin users in the country are trying to revive the crypto currency feted by geeks as the future of money and reviled by regulators as the currency of the underworld.
Among them is Mohit Kalra, 23, the son of Delhi-based businessman Sanjeev Kalra, who has launched a Bitcoin startup with long time Bitcoiner Benson Samuel in Bangalore.
The Kalras run Toni Zippers, one of India’s largest zipper manufacturing companies which claims 80 per cent market share.
To succeed, the startup Coinsecure will have to face potential legal hurdles. But Kalra is confident that the tide will turn in favour of Bitcoins in India.
“We are working with the regulators to make Bitcoins work in India. We won’t launch until we succeed,” said Kalra.
Also, India-based Unocoin, Bitcoin trading platform, which had shut after government raids, has begun operations again. “We took legal help and restarted operations. The volumes have been picking up,” said Sathvik V, who runs Unocoin.
Ahmedabad-based Mahindra Gupta who runs Buysellbitco.in, another Bitcoin trading platform which temporarily halted trading, is trying to relaunch in the next couple of months. “We are talking to a few venture capitalists to launch our platform in two-three months. We are consulting with lawyers as well,” said Gupta.
In the West, Influential Silicon Valley venture capitalist Tim Draper and personal computer maker Dell have recently backed Bitcoin. Draper bought 29,656 Bitcoins which the Federal Bureau of Investigation had confiscated from the founder of Silk Road, a Bitcoin marketplace which became popular as a place where you could buy cocaine or order a hit.
Dell said last week that it will accept Bitcoins on its e-commerce website.
Last December, the Reserve Bank of India cautioned against the use of Bitcoins. Soon after, the enforcement directorate raided Bitcoin users in the country.
After many hours of questioning that probed the possibility of using Bitcoins for hawala transactions and criminal activities, the users were let go without charges.
“The government is undecided and unclear,” says NA Vijayshankar, a cyber-law expert and former banker. According to him, a Bitcoin can be seen as an electronic document generated through an electronic process of mining and current laws cannot be applied to ban the use of Bitcoins.
“Bitcoin is not a legal tender although it could be a valuable asset,” said Sibichen Mathew, an IRS officer and the author of Making People Pay. Countries could consider amending the tax laws to tax it for income tax, wealth tax, and gift tax, depending upon the nature of transaction or possession, he adds.
Although it is not a legal tender or a currency in the traditional sense, if the people using Bitcoin honour it among themselves, the government can’t interfere, contends Vijayshankar. However, he cautions that in the past, Bitcoins have been used for money laundering and criminal activities.
Vijayshankar suggested treating Bitcoins as commodities for taxation. “If they are clouded with the mindset that the Bitcoin is a currency of the underworld then we tend to lose out in the virtual currency race,” he added.
“Instead, some serious thought has to be given by giving up the prejudice that bitcoin is criminal currency.”