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Author Topic: **IMPORTANT**URGENT** Support needed to defend the stance of bitcoin in India  (Read 8031 times)
dashingriddler
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May 04, 2015, 12:01:09 PM
Last edit: May 04, 2015, 04:52:52 PM by dashingriddler
 #1

Hello
As you know, me and my team run Unocoin.com - a trading platform for bitcoins in India.

We are asked for explanation by an authority of what exactly Unocoin does and how we are operating including regulation/licenses etc.

We are needed to visit that authority office and give the explanations on wednesday (day after tomorrow). We have printed out various articles where RBI has said they do not want to regulate bitcoin and articles on bitcoin related to india that sheds positive light and articles on bitcoin which describes its advantages to the rest of the world. Below are the links.

If you know any article or blog post which could reinforce our argument saying bitcoin is good by itself and is here to stay, help us by replying in this thread. I am sure this list be useful to many Indians bitcoin businesses in future.

http://articles.economictimes.indiatimes.com/2013-08-14/news/41409715_1_bitcoin-gox-virtual-currency

http://www.coindesk.com/the-reserve-bank-of-india-regulate-bitcoin/

http://www.coindesk.com/indian-tax-authorities-seek-clarification-bitcoin/

http://www.coindesk.com/reserve-bank-of-india-clarification-virtual-currency/

http://www.coindesk.com/indian-government-says-rbi-examining-virtual-currencies/

http://www.coindesk.com/digital-currencies-gaining-popularity-india/

http://www.coindesk.com/indias-unocoin-closes-250k-funding-deal-silbert-investment-fund/

http://www.coindesk.com/indias-central-bank-one-day-use-digital-currency-chief-says/

http://economictimes.indiatimes.com/news/international/business/samsung-testing-bitcoin-technology-beyond-currency-use/articleshow/46901816.cms

http://economictimes.indiatimes.com/news/international/business/ibm-looking-at-adopting-bitcoin-technology-for-major-currencies/articleshow/46547996.cms

http://economictimes.indiatimes.com/news/international/business/In-boon-for-bitcoin-UK-to-regulate-digital-currency-exchanges/articleshow/46615950.cms

http://www.business-standard.com/article/companies/infosys-to-re-engineer-finacle-revamp-compensation-structure-115041300355_1.html

http://www.indiabitcoin.com/bitcoins-is-not-illegal-in-india-a-whitepaper-by-nishith-desai/

http://www.coindesk.com/information/is-bitcoin-legal/

http://www.coindesk.com/new-bitcoin-exchange-unocoin-launches-india/

http://www.coindesk.com/people-free-use-bitcoin-exchanges-says-chinese-central-bank-official/

http://www.coindesk.com/goldman-sachs-director-board-bitcoin-startup-circle/

http://www.coindesk.com/wall-street-analysts-bitcoin-revolutionise-non-financial-world/

http://www.coindesk.com/bitcoin-exchanges-go-local-drive-adoption/

http://www.coindesk.com/government-report-not-lagging-bitcoin/

http://www.coindesk.com/indonesia-central-bank-takes-new-more-neutral-stance-bitcoin/

http://www.coindesk.com/micky-malka-bitcoin-can-help-worlds-unbanked/

http://www.coindesk.com/survey-results-96-of-merchants-would-recommend-bitcoin-peers/

http://www.coindesk.com/gold-cash-decentralized-data-money-revolution-continues/

http://www.coindesk.com/bitcoin-society-ceo-digital-currency-tool-global-good/

http://www.coindesk.com/bitcoin-means-global-independence/

http://www.coindesk.com/microscope-real-costs-dollar/

http://www.coindesk.com/microscope-true-costs-banking/

http://www.coindesk.com/bitcoin-needs-aggressive-legal-defense/

http://www.coindesk.com/bitcoin-remittance-services-leave-bitcoin-part/

http://www.coindesk.com/giant-awakens-asias-top-bitcoin-stories-2014/

http://www.coindesk.com/us-marshals-one-auction-bidder-claimed-all-30000-silk-road-bitcoins/

http://www.coindesk.com/us-marshals-auction-50000-bitcoins-seized-ross-ulbricht/

http://www.coindesk.com/us-marshals-auction-50000-bitcoins-march/

http://articles.economictimes.indiatimes.com/2015-04-03/news/60787340_1_unocoin-barry-silbert-indian-investors

http://www.coindesk.com/information/how-can-i-buy-bitcoins/

http://www.business-standard.com/article/companies/zebpay-eyes-2-million-funding-for-mobile-bitcoin-app-biz-115031901231_1.html

http://www.thehindubusinessline.com/opinion/its-growing-bitcoin-by-bitcoin/article7134704.ece

http://www.newsbtc.com/2015/04/05/few-notable-startups-driving-indias-bitcoin-revolution/

http://www.newsbtc.com/2015/04/19/exclusive-newsbtc-meets-sunny-ray-from-unocoin/

http://timesofindia.indiatimes.com/business/india-business/No-move-to-regulate-Bitcoins-RBI/articleshow/28071044.cms

http://profit.ndtv.com/news/your-money/article-bitcoin-explained-in-laymans-terms-376029

http://www.coindesk.com/reserve-bank-india-issues-virtual-currency-warning/

https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247

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May 04, 2015, 01:37:19 PM
 #2

I think you should order the articles in such a way
1) RBI releases, articles containing comments made by RBI
2) Articles in mainstream Indian publications (Economic Times, Business Standard, Hindu, etc)
3) Articles in crypto magazines.

The reason I say this is because the credibility of crypto publications in the eyes of the RBI may be low.

Some comments made by Raghuram Rajan on Bitcoin can be found here
http://profit.ndtv.com/news/economy/article-there-are-concerns-about-crony-capitalism-raghuram-rajan-718524
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May 05, 2015, 11:14:48 AM
 #3

Too bad that every bitcoin conference is followed by something like this. The Global Bitcoin Conference @ Bengaluru was followed by sudden activity by the authority. Everything was quiet for some time. Now they are active again after The Bitcoin Story @ Ahmedabad. I think it is better if they interact with the bitcoin community on regular basis. That would help to clear some doubt, if they have any.

For the meeting tomorrow, it seems that you were called upon by RBI. I would strongly suggest to have the Raghuram Rajan video footage in Mobile. Show it to them at the earliest. Also, I think, what polynesia has stated above is correct. Do not give primary importance to CoinDesk. Focus on what mainstream media or tech stalwarts are stating about Bitcoin. And it is good if someone from Nisith Desai & Associates accompany you.

GooD Luck... Let us know what happens.
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May 05, 2015, 12:44:24 PM
 #4

The bitcoin is good for us Indians in many ways as it gives us a little Freedom with our Economy and we also pay tax on it!
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May 05, 2015, 02:31:01 PM
 #5

Just tell them its a play currency ,and people are just having fun with this piece of code. I wonder what problem they have with it. Is it Unocoin they are targetting or bitcoin ?

You could refer to some articles or videos posted on reddit in the past. This might help :
http://www.reddit.com/r/Bitcoin/search?q=india&restrict_sr=on&sort=relevance&t=all

SPARROW
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[/quote]
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May 05, 2015, 03:11:54 PM
 #6

Here is how I'll handle this :

What is Bitcoin ?
Its a few thousand lines of software code which people exchange among themselves just like a fish seller exchanges fish in a market.

Dont blow their mind with technical sophistication they will not understand it (even if they are educated). Tell them buying "Bitcoins" is like buying Windows 8 from Microsoft.


What is the purpose of Bitcoin ?

Nothing. It is just a piece of research software. Quote research articles from various universities now.


What is the nature of business the Unocoin does with Bitcoins ?

We sell software. The software is named Bitcoin.

Is bitcoin a currency ? If so, is Unocoin registered as a forex exchange ?

No Unocoin is not registered as a forex exchange it is so because in India Bitcoin is unregulated [cite all the RBI quotes / articles now] In India Bitcoin is not recognized as a currency. But yes it does have a monetary storage value. It is a piece of property.
 
To explain further Bitcoin is a huge registry book (the network) and people own a part of that book like a page from the book. It is a piece of history and modern technology at the same time and it has a value.

Unocoin simply sells this 'software' / registry book / fish to the average Indian citizen for a certain price and retains a small fees for every sale.


Then you can continue the discussion as you feel like. This is the exact way I approached my investors when I was pitching for Krogyan.
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May 05, 2015, 08:05:47 PM
 #7

speak to all the other exchanges as well operating in india. its not their fight today but it may be tomorrow. if you all go united, there is a stronger chance each entity comes out stronger. if each of them starts getting picked out individually, it is not going to help anybody. I really hope you are in touch with Benson and Kamlesh atleast. All the best.
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May 05, 2015, 09:01:35 PM
 #8

Really commend the work Unocoin is doing.

Please take my words with a grain of salt - I mean the best for the community.

You should outright explain them in detail on how they can perform illegal activities with bitcoins in India.
Tell them how hawala can be done.
Tell them how drugs can be bought anonymously.
Tell them how gambling is possible.

Then you tell them the foolproof steps Unocoin is taking against each of the steps.



You can tell them on all the illegal things that can be done, but I doubt they will be understanding towards it, if they don't understand the concept and the need for bitcoin. Doing this would create more trouble for the company. Rather, just tell the pros, and answer any questions they might have. Seems this is tomorrow, so good luck and would be great if you could keep us updated on it as well.

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  Take Control
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May 06, 2015, 02:03:43 PM
 #9

Thanks for your replies. We did follow some of the suggestions above.

There was an incident that we needed to address. As we were fully KYC and AML complaint, and were able to answer the questions asked, this do not look like it would stretch anymore.

The only BIG question we could not convince yet is, regulation about bitcoin. The officer is bothered about bitcoins coming to India bypassing the regulated route and those bitcoins actually being exchanged for INR in India using the service like unocoin.

The issue is not just concerned to Unocoin now - it is bitcoin in general.

Explaining that drug transaction used to occur even without bitcoin, hawala exists which is less tracable than bitcoin, gambling occurs even if bitcoin did not exist etc are the wrong way to approach and i would not consider this for now as the question is about bitcoin rather than just unocoin. It could backfire.

With the current arguments that is happening, I cannot go back to square one and say bitcoin is more of the software with lines of code that is working behind the scenes. They have the idea of transaction volumes on unocoin and this officer we are talking to knows a LOT about bitcoin technically.

Unless we can convince bitcoin is not illegal (not through a whitepaper or article but though a notice from rbi or govt of india), I dont think we can bring up topics about issues with fiat currency and what good the bitcoin is doing to India or to the world.

I keep hearing about one fact but I could not figure out where I can find it officially. "Indian constitution says - unless something or some act is specified as illegal by law, it is not illegal". If someone can point out where i can see this, it would be helpful.

The meeting with this official to continue tomorrow as well.. will keep you updated.

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May 06, 2015, 02:51:41 PM
 #10

Understood your point.

But you could explain to them that BTC in India is not going to make it on it's own, if they want to track the users of Bitcoins it would be through exchange portals like Unocoin itself.

Any taxation can happen through such exchanges. Where as if someone were to trade BTC face to face they'd have the option of paying in CASH which could be black money but through exchanges like Unocoin & Coinsecure BTC would always be sold or bought with bank deposits providing a solid lead to what extent an individual is involved with BTC.

If they were to poke & shut down exchanges people would do cash trades or anonymous bank deposits which would be completely untraceable and a relation to BTC would never be made.

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May 06, 2015, 03:00:13 PM
 #11

At first, I am sorry for seeing this post late as you must have had your hearing today only.

As a lawyer, I would suggest the following things-:

1. They are not going to refer any articles of newspaper or websites, unless it is an official government website.

2. Instead of articles give them news about other countries regulating it, that might help.

3. The directors should not visit personally, unless they have been summoned.

4. You are not required to appear before them or submit any information unless you receive proper summons. However, practically it is better not to say such things as it might steam them up.

5. If at any point, you think or apprehend that talks may take wrong direction then take anticipatory bail. There are certain strings attached to it I can discuss it over a call, if you want.

6. Insist that there is nothing illegal about it. They will say that it is not legal but your story should always emphasize that it is not illegal.

Let me know in case you need any info. Will be glad to defend the community.

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May 06, 2015, 03:05:24 PM
 #12

Hey just saw your reply after posting my earlier reply. I do not think what you qouted about constitution law is in the constitution of India (Bare Act). It might be a qoute in a judgment or by someone. I might be able to research on a judgment about this qoute. Let me know if you need help.
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May 06, 2015, 03:22:41 PM
 #13

Sorry to hear that such restrictions are being faced by fully KYC compliant exchanges like Unocoin even when Bitcoin is still in early adoption phase.

Can i ask which authority was that?  A financial regulatory body,  police,  or something else?  Although i would completely understand if you don't want to share this.
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May 06, 2015, 03:51:28 PM
 #14

Hey just saw your reply after posting my earlier reply. I do not think what you qouted about constitution law is in the constitution of India (Bare Act). It might be a qoute in a judgment or by someone. I might be able to research on a judgment about this qoute. Let me know if you need help.


Agreed.
Any judgement passed by any High Court or The Supreme court where that quote is directly mentioned then you can use that case and quote as a referring point of argument, but that should be done in court during a trial if such a situation arises. Digging up documents based on just a quote can turn out to be costly (in my experience).
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May 06, 2015, 03:55:54 PM
 #15

1. You are absolutely right. It did not work.

2. It did not work either. All he said was show me what ever is only relevant to India.

3. That is why we are visiting.

4. That is why we are visiting..

5. Want to give it a try before going to bail etc. I will give you a call sometime tomorrow morning. I can see your number in your signature.

6. That is always been our approach.

Thanks for your support.

At first, I am sorry for seeing this post late as you must have had your hearing today only.

As a lawyer, I would suggest the following things-:

1. They are not going to refer any articles of newspaper or websites, unless it is an official government website.

2. Instead of articles give them news about other countries regulating it, that might help.

3. The directors should not visit personally, unless they have been summoned.

4. You are not required to appear before them or submit any information unless you receive proper summons. However, practically it is better not to say such things as it might steam them up.

5. If at any point, you think or apprehend that talks may take wrong direction then take anticipatory bail. There are certain strings attached to it I can discuss it over a call, if you want.

6. Insist that there is nothing illegal about it. They will say that it is not legal but your story should always emphasize that it is not illegal.

Let me know in case you need any info. Will be glad to defend the community.

Regards
--
Kanishk Agarwal
Advocate
CriTaxCorp
Criminal-Taxation-Corporate
www.critaxcorp.com
+919971666252

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May 06, 2015, 03:59:31 PM
 #16

Tried, did not work to defend saying exchanges are needed to track bitcoins and activities.

The question is going back to - "where exactly can i see what you are doing is legal in india and you are not violating any regulation". So need to defend bitcoin first before defending unocoin. The reverse would have been easier.

His argument is, if bitcoin is not declared legal, then even face to face transactions would deem illegal.

Understood your point.

But you could explain to them that BTC in India is not going to make it on it's own, if they want to track the users of Bitcoins it would be through exchange portals like Unocoin itself.

Any taxation can happen through such exchanges. Where as if someone were to trade BTC face to face they'd have the option of paying in CASH which could be black money but through exchanges like Unocoin & Coinsecure BTC would always be sold or bought with bank deposits providing a solid lead to what extent an individual is involved with BTC.

If they were to poke & shut down exchanges people would do cash trades or anonymous bank deposits which would be completely untraceable and a relation to BTC would never be made.



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dashingriddler
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May 06, 2015, 04:03:33 PM
 #17

Ok. Then how exactly does indian constitution differentiate between legal act, illegal act, unclassified act? Say for example, you pay money to buy food. how do you declare that is a legal act ?
If i am to physically hurt someone - i know it is illegal as it is written as illegal by the law.

If my quote is not written somewhere - let me avoid it for now.

Hey just saw your reply after posting my earlier reply. I do not think what you qouted about constitution law is in the constitution of India (Bare Act). It might be a qoute in a judgment or by someone. I might be able to research on a judgment about this qoute. Let me know if you need help.

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May 06, 2015, 04:05:04 PM
 #18

Sorry to hear that such restrictions are being faced by fully KYC compliant exchanges like Unocoin even when Bitcoin is still in early adoption phase.

Can i ask which authority was that?  A financial regulatory body,  police,  or something else?  Although i would completely understand if you don't want to share this.

Cannot disclose the authority. It is something moderately serious but winning over them will be a huge victory.

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May 06, 2015, 04:25:37 PM
 #19


I keep hearing about one fact but I could not figure out where I can find it officially. "Indian constitution says - unless something or some act is specified as illegal by law, it is not illegal". If someone can point out where i can see this, it would be helpful.


Summary of Bitcoin as per Indian constitution:
(Disclaimer : These are my own conclusions & I am not mentioning the reasons for most of them; read document to find out. Do not take my word for it; read the relevant documents as mentioned. Do your homework & consult a lawyer.)

  • Point of View : "As a Currency"
    Relevant Document : The term currency is defined in section 2(h) of the Foreign Exchange Management Act, 1999 (“FEMA”)
    Relevant Conclusion : 1. Bitcoin is not a currency as per the definition
    2. The definition is prone to easy expansion by RBI, so RBI might change it in future.
  • "As Digital Money"
    Document : Notification No. FEMA 15/2000/RB dated May 3, 2001
    Conclusion : 1. Any instrument that can be used to create a "financial liability" is also a currency.
    2. Bitcoin is NOT such an instrument since it is not backed by any institution and only at the consent of participating parties.
  • "As Securities & derivatives"
    Document : Section 2 (h) of the Securities Contracts (Regulation) Act, 1955
    Conclusion : 1. Bitcoin is not a security or a derivative.
  • "As Derivatives & Negotiable Instruments"
    Document : Section 17(6A) of the Reserve Bank of India Act, 1934 & Negotiable Instruments Act, 1881
    Conclusion : 1. Bitcoin is not a derivative or negotiable instrument.
  • "As Prepaid Payment Instruments"
    Document : Payment and Settlement Systems Act, 2007
    Conclusion : 1. Bitcoin is not a prepaid payment instrument since the value is not constant.
  • "As Computer program"
    Document : Indian Copyright Act
    Conclusion : 1. Bitcoin is a computer program.
  • "As goods and property"
    Document : The General Clauses Act, 1897 & the Forward Contracts (Regulation) Act, 1952
    Conclusion : 1. Bitcoin is 'goods' and 'movable property'.
  • "Using bitcoins"
    Document : The Sale of Goods Act, 1930
    Conclusion : 1. Bitcoin is a form of 'barter' and thus not governed by this act.
  • "Buying/Selling bitcoins"
    Document : The Sale of Goods Act, 1930 and Customs (http://www.dov.gov.in/newsite3/section7.asp)
    Conclusion : 1. Customs on barter transaction is an unsolved problem in our law, thus unclear on buying bitcoins from abroad.
    2. Software imported online does not attract any duty under Indian law.
    3. Bitcoin is legal barter if the good it is being exchanged for is legal and the bitcoins were obtained by legal means. (Eg: No silk road coins allowed)

Overall conclusions :
Definition of 'currency' and 'prepaid payment instrument' can be and has been in past changed overnight to include bitcoin.
Currently bitcoin is to be treated as 'computer program' or 'software imported online' depending on where they were mined.

Tip! if it helped Smiley

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May 06, 2015, 06:23:46 PM
 #20


Where exactly can i see what you are doing is legal in India and you are not violating any regulation.

In that case in you will have to explain to them with the help of a lawyer who is ready to argue with the officials as if it was court.
They are indirectly asking you to provide the legitimacy of Bitcoin when the RBI officials themselves have declared on public forums that Bitcoins are not illegal in India. Its not your job to make new laws. So in my opinion get a financial adviser who specializes in Business law and most importantly FEMA 99
You must talk with your lawyer and have him advocate the clauses of FEMA in favor of your business. Defend your business defend BTC after that. You MUST bring their attention to the very limitations and restrictions imposed by FERA 74 which lead to the introduction FEMA 99 and how trading in BTC is in no direct violation of any FEMA 99 or PMLA 02 clauses.

Its a lot like lobbying. They will not be on the same page with you, but they dont necessarily have to oppose you either. Let them speak and let them give you a solution before you present yours.

Seriously, good luck bro.


Edit :
+1 to whatever Skang said.
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