Legal Limits with Remittances in India Affect Synergies with Bitcoin and Blockchain
Vishal Gupta, Founder of Bitcoin Alliance India, on the main problems with Bitcoin and Blockchain development in India
Bitcoin and Blockchain technology are very young and novel for millions of people all over the world. Moreover, several countries are still arguing about the status of this FinTech innovation, and how they could use it in the local financial industry. The same situation applies to India where Bitcoin and Blockchain face a miryad of problems in the country.
Vishal Gupta is the Founder of Bitcoin Alliance India, CEO at SearchTrade, and Director at Moving Trumpet. Cointelegraph turned to Vishal Gupta to find out what are the main problems with Bitcoin and Blockchain development in India.
CT: How difficult is it to promote Bitcoin and Blockchain in India? Which problems do these technologies face in the country?
Vishal Gupta: Key challenges in promoting Blockchain is around educating people about how it works to start with. Bitcoin on the other hand is very easy to promote but existing capital controls and lack of investment in mining has hampered the growth of the bitcoin market. Of course, there is general fear amongst investors and users around the legality of the use of bitcoin.
“If we can get past the legality debate we can build a robust bitcoin marketplace in India.”
CT: What is the main role of Bitcoin Alliance India? Is it a bridge between government and market?
VG: Bitcoin Alliance India (BAI) is a Bitcoin think tank based out of India that was created with the objective of understanding implications and opportunities around bitcoin in India. At BAI we have consulted many experts in the field of law and taxation to understand how bitcoin fits into the Indian legal and tax system. We have made many presentations to various government bodies and deliberated with them on the subject.
CT: What is the legal approach to Bitcoin and Blockchain in the country?
VG: There are no adverse regulations other than getting past strict foreign remittance capital controls, which makes it almost impossible to buy or trade bitcoin overseas. Blockchain has applications beyond financial transactions, it can be used for providing or delivering e-governance services in a transparent way.
"I have spent lot of time with lawyers and accountants to understand regulation and tax implications around bitcoin in India, the conclusion is they are legal and there is a clear taxation framework available but there are few no go areas like overseas remittances."
The Blockchain itself attracts no regulations but challenges are around building and showcasing products and services to potential customers at large. There are very few functional demos that demonstrate practical blockchain use in daily life and the benefits it might have for businesses and consumers. There needs to be a lot of investment in Research & Development before it can be applied to mainstream applications.
CT: How does the Indian government treat cryptocurrecny?
VG: The blockchain is essentially a distributed database so it attracts no regulations or controls from the government what so ever. They treat it as a piece of technology. Bitcoin is a more complex issue, since there is no definition of what bitcoin is. Therefore, what laws or regulations apply on bitcoin primarily depend on the nature of the business itself. There are no restriction on buying or selling bitcoins or selling goods and services with bitcoin. Opening exchanges and trading platforms are a grey area. Remittance is absolute no go area, wallets services are legal, while exchanges and trading are grey because financial services in general are heavily regulated in India. But since bitcoin is not classified as a currency it escapes those regulations.
CT: Are local banks friendly to Bitcoin and Blockchain innovations?
VG: We have not seen a lot of interest from banks in India around Blockchain innovations as yet primarily because there are not enough solutions to showcase as yet. However, when we meet bankers at conferences they do seem very interested in learning more about blockchain technology and its application in the banking sector.
“Bitcoin is a taboo for bankers for now mostly because there is no clear policy framework provided by the regulators yet but there are lots of trading platforms that are operating with bank accounts in India without any issues.”
CT: Everyone talks about the integration of India into the world financial market. Does that concerns the Indian crypto industry as well? Do you have some established contacts with markets in other countries?
VG: India is already well integrated with global financial markets but there are restrictions and regulations in place to control capital outflows, for instance Indian citizens cannot invest beyond $250K in foreign investments. These issues create barriers in terms of ease of investing in financial markets abroad as a result buying bitcoin from a foreign exchange is difficult and cumbersome in terms of paperwork and compliance investors must endure.
These challenges make it difficult to build business relationships with overseas exchanges and trading platforms hence hampering the growth of the Bitcoin marketplace in India.
CT: Which Indian companies provide Bitcoin and Blockchain solutions to deal with the existing problems of the Indian crypto industry?
VG: There are a few good bitcoin trading and wallet businesses in India that have built good reputation for themselves over the past 2 years of operations such as ZebPay, Coinsecure and Unocoin. Other than few minor issues they have delivered services efficiently and are well engaged with their customers. Most of them also conduct bitcoin awareness campaigns at colleges and trade events which is helping expand the marketplace gradually.
CT: What problem does your own project solve?
VG: SearchTrade was created with the objective of presenting an alternate business model for internet businesses by using inherent micro-payment advantages of bitcoin to deliver value. At SearchTrade we are building a search engine that shares its revenue with its users for searching on our platform. These searches are responsible for the income the platform generates. Moreover, we also allow our users to own keywords (Words used in a Search Query) and earn bitcoin income every time the keywords they own becomes part of a search query.
Search is the starting point for most internet users which guides them to relevant websites and content based on their queries, we believe the wealth this process generates needs to be re-distributed back to users.