Indian cryptocurrency trading platform Unocoin has found itself amidst heated controversy over the launch of its first cryptocurrency kiosk in Bengaluru. While the existence of the machine had already been leaked prior, the company officially unveiled it roughly ten days ago, on October 14. This is the first time that a physical machine has aided the purchase and sale of cryptocurrency in India.
Unlike other Bitcoin ATMs installed around the world, the kiosk is only accessible by users that have previously registered with Unocoin’s trading platform. As long as that requirement is satisfied, users can use the machine to deposit or withdraw a minimum of 1,000 Indian Rupees (INR) per transaction. In the case of cash deposits, these funds can be used to trade or purchase digital currencies on Unocoin or the company’s crypto to crypto trading platform, Unodax.
Shortly after the kiosk went live, however, questions regarding the machine’s legality began pouring in from local publications and social media. Most of the concerns had some merit, given the Indian financial regulator’s strict stance on cash handling, ATM establishment and cryptocurrency trading. However, other rumors were vaguer and alleged that the machine was being investigated by the Indian cyber cell division.
The sudden influx of criticism naturally did not go unnoticed by the company. A Twitter statement published October 21 read:
“Our Machine didn’t go well with few mainstream media reports who projected it under a negative light. The machine is still under final testing mode and it will be up and running in the upcoming week.”
Following this, the company proceeded to move the machine to an undisclosed location, presumably to avoid further backlash in the interim.
We reached out to Unocoin CEO Mr. Sathvik Vishwanath to understand the company’s position on the matter and how it has managed to stay within the confines of the law. He responded that the machine has been intentionally designed to not function as a typical automated teller machine (ATM). He instead believes that the term ‘kiosk’ would be better suited for Unocoin’s installation. According to Vishwanath, the distinction allows the machine to fall outside the scope of the banking network and by extension, the regulation on ATMs.
Vishwanath chose to not comment on the rumors, asserting that they were unsubstantiated and were not grounded in reality. When asked about plans for expansion in other parts of the country, he said that Unocoin will look into adding more kiosks in Mumbai and Delhi in due time.
Digital currency trading was effectively dealt a huge blow earlier this year by the Indian central bank, Reserve Bank of India (RBI). After issuing several cautionary circulars between 2013 and 2017, the regulator directed all financial institutions operating in the country to cease relationships with cryptocurrency companies within a three month time frame. Since the ban came into effect on July 6, Indian cryptocurrency exchanges have not had access to banking services or a way to process crypto-fiat transactions.
Unocoin was one of the several cryptocurrency exchanges affected by the ban. Shortly before the regulation was fully imposed, however, it announced the launch of Unodax, a crypto-crypto trading platform that eliminates the need for fiat currency. However, other exchanges decided to introduce peer to peer trading to continue providing fiat liquidity. Structured similarly to LocalBitcoins, both WazirX and Koinex Loop offer users the ability to buy and sell cryptocurrency directly from each other. Notably, both platforms require their respective users to complete KYC verification.
Featured image from Unocoin.
Last modified: May 20, 2020 3:42 PM UTC