[2013-27-12] India cracks down on bitcoin exchange

[spndr7]

http://www.dnaindia.com/india/report-first-time-in-the-country-ed-raids-a-bitcoin-seller-in-ahmedabad-1941187

On Thursday, ED raided the premises of Mahim Gupta in Bopal area of the city who provides trading platform through his website -‑ buysellbit.co.in. During the preliminary investigation, the ED found that it is in clear violation of Foreign Exchange Management Act (FEMA) rules of the country as central bank does not provide permission to indulge in such transactions.

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[BTCLuke]

This is probably the worst thing imaginable for India.   

Just 2 weeks ago India had its' first conference: http://www.globalbitcoinconference.com/

BFL's Josh Zerlan and Johann Gevers of OT/Monetas both spoke there... Alongside Mahin Gupta.

From this article:

On Thursday, ED raided the premises of Mahim Gupta in Bopal area of the city who provides trading platform through his website -‑ buysellbit.co.in. During the preliminary investigation, the ED found that it is in clear violation of Foreign Exchange Management Act (FEMA) rules of the country as central bank does not provide permission to indulge in such transactions.

A few days after the conference, India warned its' citizens that bitcoin is unsafe. This caused the exchanges, including Mahins to shut down tuesday.

Specifically mentioned in this article:

Another operator, buysellbitco.in, informed investors that it is suspending buy and sell operations until it can outline a clearer framework with which to work.

“This is being done to protect the interest of our customers and in no way is a reflection of bitcoin’s true potential or price,” buysellbitco.in said in a statement posted on its website.

So we have to conclude that if he was on top of the game and complying with rules but then they raided him soon thereafter, India is now officially far more aggressive against bitcoin than any other country on earth.

They're even beating out North Korea now... Such savages!

[bryant.coleman]

My Indian friend called me a few hours ago, and told me that he is deleting his Localbitcoins.com account. His bank accounts were linked to it, and he is now fearful that the police might come after him. But he also told me that there are still Indian users who are selling Bitcoins using that site.

[LiteCoinGuy]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

[notthematrix]

https://localbitcoins.com/ select India , don't see any problems to get bitcoins.

Dont see any way they can stop it , annyway , in agentina rules are worse , but still you can get them

[spndr7]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

Bitcoin is not illegal in India,but fiat money laundering (through the point, where conversion of bitcoin to rupees takes place) is certainly illegal if established norms are not followed.

[mpradeep]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

Bitcoin is not illegal in India,but fiat money laundering (through the point, where conversion of bitcoin to rupees takes place) is certainly illegal if established norms are not followed.

Can you please clarify on what kind of norms to be followed if i am bitcoin trader while converting BTC to indian Rupees.

[dc0ded]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

Bitcoin is not illegal in India,but fiat money laundering (through the point, where conversion of bitcoin to rupees takes place) is certainly illegal if established norms are not followed.

Can you please clarify on what kind of norms to be followed if i am bitcoin trader while converting BTC to indian Rupees.

I think its a very dark zone. Laws here in India are very unclear on many things. I think you need a panel of expert lawyers to frame proper guidelines. Else the authorities can always use the laws according to their convenience. And when you are following government guidelines in India things might get more tougher for you... Any business paying income taxes knows it very well. Once the authorities know that you are a bitcoiin trader you will be the scape goat. Be ready for hundreds of audits, notices and explanations.

[justusranvier]

My Indian friend called me a few hours ago, and told me that he is deleting his Localbitcoins.com account. His bank accounts were linked to it, and he is now fearful that the police might come after him. But he also told me that there are still Indian users who are selling Bitcoins using that site.

I doubt that the owners of a site in Finland are giving customer information to the authorities in India. There's no means by which they could issue a subpoena.

Only the USSA gets to effectively exercise extraterritorial jurisdiction.

[lumierre]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

Bitcoin is not illegal in India,but fiat money laundering (through the point, where conversion of bitcoin to rupees takes place) is certainly illegal if established norms are not followed.

Can you please clarify on what kind of norms to be followed if i am bitcoin trader while converting BTC to indian Rupees.

I think its a very dark zone. Laws here in India are very unclear on many things. I think you need a panel of expert lawyers to frame proper guidelines. Else the authorities can always use the laws according to their convenience. And when you are following government guidelines in India things might get more tougher for you... Any business paying income taxes knows it very well. Once the authorities know that you are a bitcoiin trader you will be the scape goat. Be ready for hundreds of audits, notices and explanations.

Don't let them rape you. You guys need to fight back. Bitcoin isn't a currency issued by any nation so legally they don't have any power over it and the people behind it. It's just something a group of people decided has value. What if next time they arrest you for trading eggs? Stand up and fight fo you rights.

[bryant.coleman]

I doubt that the owners of a site in Finland are giving customer information to the authorities in India. There's no means by which they could issue a subpoena.

Only the USSA gets to effectively exercise extraterritorial jurisdiction.

Better be safe now, than sorry later.

The Indian Income Tax is notoriously corrupt and biased. If they get a stick to beat you, then you will lose your life's earnings. Going for appeals won't help. It will take 10-15 or even 25 years to get a court date.

[seriouscoin]

I doubt that the owners of a site in Finland are giving customer information to the authorities in India. There's no means by which they could issue a subpoena.

Only the USSA gets to effectively exercise extraterritorial jurisdiction.

Better be safe now, than sorry later.

The Indian Income Tax is notoriously corrupt and biased. If they get a stick to beat you, then you will lose your life's earnings. Going for appeals won't help. It will take 10-15 or even 25 years to get a court date.

Not if the citizens keep their life saving in BTC..... What the fck can they do? order to pay in ruppees? Good luck with that....

I honestly hope the Indians will be smart about this.

[bryant.coleman]

Not if the citizens keep their life saving in BTC..... What the fck can they do? order to pay in ruppees? Good luck with that....

I honestly hope the Indians will be smart about this.

This is going to be their modus operandi:

1. First they will arrest the exchange owner. Then they will extract all the trade logs, complete with the Bitcoin wallet ids and linked bank accounts.

2. They will calculate how much BTC was bought / sold by each of the users.

3. Since they now have the bank accounts of the users, the authorities will contact them and ask them to pay VAT (can be 12.5% or can be 20%) + penalty for their purchases and Short Term Caps Gains (30%) + Penalty for gains from sales.

4. If you don't pay the penalty, they will seize your assets.

[LiteCoinGuy]

bitcoin is not illegal in india. why should it? but when you open a business and dont care about laws and regulation, you get punished.

Bitcoin is not illegal in India,but fiat money laundering (through the point, where conversion of bitcoin to rupees takes place) is certainly illegal if established norms are not followed.

yep but in the future we will see better exchanges that comply with the laws, iam pretty sure.

[bitgold]

Not if the citizens keep their life saving in BTC..... What the fck can they do? order to pay in ruppees? Good luck with that....

I honestly hope the Indians will be smart about this.

This is going to be their modus operandi:

1. First they will arrest the exchange owner. Then they will extract all the trade logs, complete with the Bitcoin wallet ids and linked bank accounts.

2. They will calculate how much BTC was bought / sold by each of the users.

3. Since they now have the bank accounts of the users, the authorities will contact them and ask them to pay VAT (can be 12.5% or can be 20%) + penalty for their purchases and Short Term Caps Gains (30%) + Penalty for gains from sales.

4. If you don't pay the penalty, they will seize your assets.

Sounds like straightly coming from Nazi's playbook.

What a shame for a "democratic" regime. 

Thank God for: a) I am not a citizen of that country, b) I am not a female citizen from that country.

[stompix]

Change the title to India cracks on illegal bitcoin exchange.

Also , nobody cares about them and their 2 BTC volume.

[ArticMine]

Bitcoin will survive this. Seriously! These are among the reasons why:

http://coinmill.com/BTC_PKR.html
https://bitcoinspakistan.com/
https://localbitcoins.com/country/PK
http://bitcoinpk.com/

Edit: This "divide and conquer argument" is also the reason why governments around the world will never be able to stamp out Bitcoin.

[bryant.coleman]

Change the title to India cracks on illegal bitcoin exchange.

Also , nobody cares about them and their 2 BTC volume.

That is negative attitude. You can't blame the Indians for the actions of its corrupt government, although they were the ones who elected it to the office.

And another thing. Although the current volumes from India is microscopic... don't forget that India is having a population of 1.3 billion and is one of the most rapidly growing economies in the world. 

[stompix]

Change the title to India cracks on illegal bitcoin exchange.

Also , nobody cares about them and their 2 BTC volume.

That is negative attitude. You can't blame the Indians for the actions of its corrupt government, although they were the ones who elected it to the office.

And another thing. Although the current volumes from India is microscopic... don't forget that India is having a population of 1.3 billion and is one of the most rapidly growing economies in the world.  

Yeah , on paper...
I saw through the last years the myth of the BRICS falling apart.
China with is fake numbers and currency manipulation , Russia with its' citizen running away to Europe, India with hundreds of thousands of people starving each year, Brazil who can't afford both  a world championship and normal healthcare and South Africa which in 30 years will have more people infected with HIV than healthy.

Face it , the bitcoin trained is fueled by the western countries.
If the Eu does the same as china and India , we can count bitcoin in cents for a few months.

[bryant.coleman]

Yeah , on paper...
I saw through the last years the myth of the BRICS falling apart.
China with is fake numbers and currency manipulation , Russia with its' citizen running away to Europe, India with hundreds of thousands of people starving each year, Brazil who can't afford both  a world championship and normal healthcare and South Africa which in 30 years will have more people infected with HIV than healthy.

Well.... some of the facts are true. The others are not.

1. Chinese Yuan is getting stronger every day, whether it is due to currency manipulation or not.

2. Russian citizens are not running away to Europe. They were, until 4 or 5 years ago. Right now, Russia is having a positive net immigration.

3. Millions of people are starving in India. But things will change if the opposition is voted in to power in 2014.

4. Brazil is a lawless country, where you can cut down forests and massacre the indigenous tribals without any consequences. So no comments.

5. South Africa has suffered from massive brain drain and crime wave. Not going to be one of the top economies in the future.

[stompix]

Yeah , on paper...
I saw through the last years the myth of the BRICS falling apart.
China with is fake numbers and currency manipulation , Russia with its' citizen running away to Europe, India with hundreds of thousands of people starving each year, Brazil who can't afford both  a world championship and normal healthcare and South Africa which in 30 years will have more people infected with HIV than healthy.

Well.... some of the facts are true. The others are not.

1. Chinese Yuan is getting stronger every day, whether it is due to currency manipulation or not.

2. Russian citizens are not running away to Europe. They were, until 4 or 5 years ago. Right now, Russia is having a positive net immigration.

3. Millions of people are starving in India. But things will change if the opposition is voted in to power in 2014.

4. Brazil is a lawless country, where you can cut down forests and massacre the indigenous tribals without any consequences. So no comments.

5. South Africa has suffered from massive brain drain and crime wave. Not going to be one of the top economies in the future.

Well , I do agree and I do not agree with some

1) You think that a manipulated currency is a good thing ? If that's ok , with you , then so be it

2) Russians are fleeing Russia , the + comes from the former soviet countries Tajikistan Uzbekistan , Kazakhstan and , that not a +

3) Maybe will change , or 99% nothing will change.

4) Agree with you but it's far worse then that. It appears their economy is a lie just like their oil fields.

5) Don't want to further comment this , I'll be labeled a racist.

[bryant.coleman]

Well , I do agree and I do not agree with some

1) You think that a manipulated currency is a good thing ? If that's ok , with you , then so be it

2) Russians are fleeing Russia , the + comes from the former soviet countries Tajikistan Uzbekistan , Kazakhstan and , that not a +

3) Maybe will change , or 99% nothing will change.

4) Agree with you but it's far worse then that. It appears their economy is a lie just like their oil fields.

5) Don't want to further comment this , I'll be labeled a racist.

Here is the truth:

1. There is some manipulation, but I don't believe that it is in high volumes.

2. Ethnic Russians are not fleeing Russia. Russia is a nation of some 143 million people. Last year less than 100,000 of them emigrated outside and most of them were ethnic Chechens. Kazakhstan, Kyrgyzstan.etc have a large ethnic Russian population. Some of those migrating to Russia are these ethnic Russians.

3. If you follow the political mood in India closely, then it is clear that there is a massive popular wave against corruption. So I am optimistic.

4. Brazil economy depends a lot on Agro-industry. And they cut down 2 million hectares of Amazon forest every year to plant new Soya fields and cattle ranches. Once the EU/ US ban their Soya, Ethanol, Beef and Mahagony they will be in ruins. 

5. lol... understood.

[jeliman]

China and India actually might make the difference.

India is the oldest "democracy", China the most progressive economy.

Needless to say they represent substantial part of global population and production.

When they step on the bitcoin's (crypto) neck, other countries might folow in the long run.

[spndr7]

Can you please clarify on what kind of norms to be followed if i am bitcoin trader while converting BTC to indian Rupees.

India's ICICI Bank's FEMA(Foreign Exchange Management Act) FAQ

Person sending money abroad, should provide their identity and residence proof at the time of placing the request for outward remittance to authorised MTSS agent. The payment for the remittance may be made by account payee cheque or Demand Draft or by Cash deposit (upto Rs. 50,000/-) (806 USD).

They should have got MTSS authorized agent's license.
Money Transfer Service Scheme - Authorized Indian agents

[bryant.coleman]

China and India actually might make the difference.

China will make the difference. India... not much so. The total GDP of India is much lower than many other developing nations. And the GDP growth has stunted ever since the current ruling party was voted in to power (in 2004).

[jinni]

Can you please clarify on what kind of norms to be followed if i am bitcoin trader while converting BTC to indian Rupees.

India's ICICI Bank's FEMA(Foreign Exchange Management Act) FAQ

Person sending money abroad, should provide their identity and residence proof at the time of placing the request for outward remittance to authorised MTSS agent. The payment for the remittance may be made by account payee cheque or Demand Draft or by Cash deposit (upto Rs. 50,000/-) (806 USD).

They should have got MTSS authorized agent's license.
Money Transfer Service Scheme - Authorized Indian agents

Interesting. But I'm not sure a regular Bitcoin exchange would fall under the Money Transfer Service Scheme (MTSS). MTSS is supposed to make foreign remittances easier, but only for personal relations like family.

This is from the Reserve Bank of India website:

5. Other conditions

a. Only cross-border personal remittances, such as, remittances towards family maintenance and remittances favouring foreign tourists visiting India shall be allowed under this arrangement.

Now with a Bitcoin exchange one cannot chose to whom one is sending the money. But of course one could make a service where one sends Bitcoin and the recipient receives Rs. All one need to do is apply according to the above link and have about $130k in reserves etc.

On the other hand, if one wishes to trade in foreign (more like global) currency, like Bitcoin. One needs to comply with the Foreign Exchange Management Act (FEMA). And as far as I can tell it gives extremely broad discretion to the RBI. Basically, if the RBI feel like they can trust you to always do as they say, you will be allowed to operate on their terms alone. It seems like this would only be possible to do if one partnered with a bank.

So as far as I can tell Bitcoin is legal in India under the following terms:

1. Used as a Bitpay-like foreign remittance technology by a company that has $130k and the patience to comply with regulation (ie. to verify the identity of both parties).

2. A partnership with a bank to make an INR-BTC exchange. This bank would have to be in close dialogue with the RBI though.

These type of legal services might come over time, but as anything that has to comply with regulation in India it will need just that - time.

The most likely place for Bitcoin exchange in India is in the grey markets, on the street. As one can easily bring BTC into India, having liquidity in this market would be the matter of a number of individuals going to India to top-up the local grey market, then making outward remittances with the cash they get for the BTC. I'm sure the grey market will find many other ways of doing this as well.

[BTCIndia]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

[notthematrix]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

tanks for the inside , well now see when will btcindia re-open?

[jinni]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

You might be right. There are two extremes in which they can view the exchange owner, one extreme is that he is arrested for breaking many FEMA regulations and hence jailed. The other is that they accept a plea of ignorance as long as he cooperates.

But, is there really any doubt that a Bitcoin exchange will not have to apply to the same foreign currency exchange limitations that are applied on foreign fiat? Would there be any difference legally between exchanging between INR/BTC and INR/USD? The reason I ask is because the strict foreign exchange regulations in India are in place to give the RBI as much control as possible over the INR and its exchange rate.

So far India has not revealed any law saying that Bitcoin is not a currency, hence once an Indian has BTC (without going into details of how the BTC was acquired) that person could use it like a currency and trade it for goods and services just like with INR right?

[jeliman]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

hope UR right, similarly, the "chinese bitcoin ban" others see as a chinese careful yes to BTC

in direct oposition to the panic exchange price drop

[bryant.coleman]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

That might be true. But then why they are threatening to arrest everyone who own Bitcoins? The exchange owner might have committed some mistakes. And the enforcement is making use of it to banish Bitcoin from India.

[BTCIndia]

You guys must understand that exchange owner had company registered at fake address. Got it? Second, he transferred money overseas to get hold coins. In India, we have strict capital controls and laws were violated by exchange owner. Plus, they wanted better insight in Bitcoin economy and interrogating easiest way. They've only raided not arrested them. Okay? Government is just being government here, taking time to absorb and understand complex crypto-currencies. Peace!

That might be true. But then why they are threatening to arrest everyone who own Bitcoins? The exchange owner might have committed some mistakes. And the enforcement is making use of it to banish Bitcoin from India.

Like other central banks out there we've just warned users. Okay? Let them banish, if they want to. What's wrong in that? Revolutionary Osho was restricted in your country. We cried? No! You don't worry about our country and Bitcoin laws here. We can take care of it, being more experienced in handling diversified culture and financial system better than anybody else in world. Believe me! They understand more than we do and are capable of taking decision on our behalf. They can see what you/we usually miss. We believe in collective  and evolved wisdom not forced one. You can't force financial evolution on us. We're try to be sovereign ad mist all developed country and you makes things more complicated for us. Please cooperate!

 It's not first time westerns have came up with revolution. And I'm here to protest 'innocent' enthusiast.

Om Shanti Shanti!

[bryant.coleman]

Like other central banks out there we've just warned users. Okay? Let them banish, if they want to. What's wrong in that?

Oh... you deserve a Nobel prize for that.

You don't worry about our country and Bitcoin laws here. We can take care of it, being more experienced in handling diversified culture and financial system better than anybody else in world. Believe me! They understand more than we do and are capable of taking decision on our behalf. They can see what you/we usually miss. We believe in collective  and evolved wisdom not forced one. You can't force financial evolution on us. We're try to be sovereign ad mist all developed country and you makes things more complicated for us. Please cooperate!

Typical Indian arrogance. I don't care about your country. Do whatever you want. But I have only one doubt. If you are so much experienced in handling diversified culture and financial system better than anybody else in world, then why India is one of the poorest countries in the world? Also, why every day thousands of Indians are queuing up for British / American visas?

[BTCIndia]

Like other central banks out there we've just warned users. Okay? Let them banish, if they want to. What's wrong in that?

Oh... you deserve a Nobel prize for that.

You don't worry about our country and Bitcoin laws here. We can take care of it, being more experienced in handling diversified culture and financial system better than anybody else in world. Believe me! They understand more than we do and are capable of taking decision on our behalf. They can see what you/we usually miss. We believe in collective  and evolved wisdom not forced one. You can't force financial evolution on us. We're try to be sovereign ad mist all developed country and you makes things more complicated for us. Please cooperate!

Typical Indian arrogance. I don't care about your country. Do whatever you want. But I have only one doubt. If you are so much experienced in handling diversified culture and financial system better than anybody else in world, then why India is one of the poorest countries in the world? Also, why every day thousands of Indians are queuing up for British / American visas?

Sometimes arrogance is necessary. Neither care about your care for our country. I always did whatever I want and will continue to do so. I don't need direction for doing 'whatever'. India is poor because we haven't conquered foreign soil since last 10,000 years for resources. Jio Aur Jeene Do(Live and let live) is our motto. We've spiritual wealth that most people aren't capable of absorbing. Last question is irrelevant to me. If you still need answer. I'll drop PM.

 

[spndr7]

India is poor because we haven't conquered foreign soil since last 10,000 years for resources.

There is only 2 options always, no third option --

1. conquer or be conquered

2. enslave or be enslaved

3. rule or be ruled

4. humiliate or be humiliated

Our country has realized it, since we became truly and legally united in 1947.

Unfortunately, this is the stark truth, that utopia of perfect balance in society and world, had been a fry cry for humanity.