A few days back, we reported how India’s Central Bank Reserve Bank of India (RBI) in its latest notice to the users of virtual currencies in the country has urged them to be extra cautious while engaging in any digital currency-related activity. While everyone thought the notice will lead to a situation of panic among the industry and its investors, but Indian Bitcoin Startups decided to take this notice as an opportunity to create an industry association.
Bitcoin startups such as Searchtrade, Zebpay, Unocoin and Coinsecure have all come together to form the Blockchain and Virtual currency Association of India and are reportedly currently in the midst of formally registering the association.
The association has in fact had its first meeting in Mumbai last week where the members discussed the aforementioned RBI circular in detail amongst a few other things.
According to a statement given to TOI by Saurabh Agarwal, co-founder, Zebpay, which is a famous Bitcoin trading and wallet company, they have been planning to create an association for some time now but the notice finally pushed things into action. He also added that initially they thought of just reviving the old association -Bitcoin Alliance of India, which was formed in the year 2014 but is now defunct, but they finally decided to go ahead and form a new association so as to also include blockchain companies into it. Post-demonetisation, service oriented Zebpay saw a massive upsurge in interest and within just 18 days into demonetisation, the price of one bitcoin on Zebpay had increased from Rs 51,600 to Rs 69,500. But, the latest caution circular by RBI might put a dent into its happiness.
As of now, the Blockchain and Virtual currency Association of India only has four members, but the association is hopeful of adding more bitcoin startups from the 20 odd startups currently working in the space in the country. Reportedly, prior to this, an attempt at forming a Bitcoin association had failed miserably since the companies were still pretty small in size back then.
RBI has always been sceptical about bitcoin usage in India as it is currently not regulated in the country. In fact, the Central Bank has always made it opinion on Bitcoin known to the Indian citizens. In 2013, it had said that it was closely following the developments relating to “Decentralised Digital Currency” or “Virtual Currency” (VCs), such as Bitcoins, their usage or trading in India.
Its latest notice reads, “The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.”
The main objective of the Blockchain and Virtual currency Association of India is to create an industry body that can engage with regulators. In addition to this, the association will also focus its attention on making Bitcoin trading safe in the country by ensuring that the members follow strong KYC measures and by creating awareness among bitcoin users about Ponzi schemes and various other risks attached with the usage of virtual currencies.
It is important to note that the RBI’s caution circular came at a time when bitcoin usage in the country is popular than ever. Since the November 8 demonetisation announcement, wherein the Indian government had banned the circulation of previously issued currency notes of 500 and 1,000 denomination and replaced them by fresh currency notes of 500 and 2,000 denomination, the bitcoin industry in the country has seen a significant increase in demand.