Even when the Indian government and its apex bank Reserve Bank of India (RBI) virtually banned cryptocurrency trading, Unocoin, one of the Indian cryptocurrency exchanges installed an ATM kiosk in Bengaluru, only to get it seized within a week.
The cybercrime police seized the ATM kiosk and arrested Unocoin’s founder Harish BV, for not taking the required permission from regulators and government bodies to setup an ATM machine. After being produced before a court, Harish BV was sent seven days of police custody.
Unocoin had plans to install such ATM machines in Mumbai and Delhi as well.
The crime branch said in a statement, "The ATM kiosk installed by Unocoin in Bengaluru's Kempfort Mall has not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law."
According to media reports, central crime branch seized a teller machine, two laptops, a mobile, three credit cards, five debit cards, a passport, five seals of Unocoin, a cryptocurrency device and some cash.
Earlier this year, finance minister Arun Jaitley while presenting the annual budget had said, “The government doesn’t consider cryptocurrencies a legal tender or coin and will take measures to eliminate use of the crypto-assets in financing illegitimate activities.”
However, Sathvik Viswanath, co-founder of Unocoin, told the media that it is perfectly legal for Indians to buy and sell bitcoin.
He said that the company got a lot of bad press after the Finance Minister announced a ban in February 2018. Viswanath said that the minister's statement was clear--that cryptocurrencies are not legal tender in India-- but he never said that it was "illegal tender".
Viswanath said that there was a huge difference, and what the minister meant was that you bear the risk of your investment and there is no regulation in the industry.
Earlier this year, almost all Indian banks had disabled the bank accounts of Indian cryptocurrency exchanges where users were depositing money to buy cryptocurrencies. As depositing and withdrawing the money became difficult for the users of Indian cryptocurrency exchanges, a few of them shut shop.
Zebpay, an Ahmedabad based exchange that dealt in Bitcoins closed its operations in September. In a statement, the company said, “Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain. However, the recent past has been extremely difficult. The curbs on bank accounts have crippled our, and our customers' ability to transact business meaningfully.”
In 2017, cryptocurrency had gained a lot of users as well as exchanges being setup in India. The hype to invest in cryptocurrencies had increased so much so, that a few restaurants and shop owners had even started accepting payment in Bitcoins. The lack of government regulation and rules marred the dream of Indian cryptocurrency exchanges and individual investors.