Bitcoin Faces New Regulatory Challenge In India

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Bitcoin Faces New Regulatory Challenge In India
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Bitcoin users and regulators in India apparently disagree about whether trading the digital currency is illegal. India Today reports that the Enforcement Directorate (ED) has searched two bitcoin-related businesses based in Ahmedabad. The searches came just days after the Reserve Bank of India (RBI) warned the public not to trade bitcoins.

Bitcoin operators accused of violations

According to the ED, both of the two bitcoin operators violated the Foreign Exchange Management Act because the RBI doesn’t allow the types of transactions which involve bitcoins. However, tax officials in India have something entirely different in mind. They reportedly went to Unocoin and Coinmonk around the same time, not to search their offices, but rather to talk about how bitcoins are used. Of course their goal isn’t about keeping bitcoin trading from happening, but about figuring out how to tax bitcoin miners.

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Bitcoin users not anonymous in India

While the use of bitcoins originally became popular as a way to pay for things anonymously, the report indicates that transactions conducted through the sites require users to provide their PAN card information. This makes it possible for tax officials to track the people who use the website. The biggest problem Indian officials face now is whether bitcoins will be able to move money internationally, keeping it out of the hands of taxing authorities. Currently it’s easy for the digital currency to be bought or sold without the involvement of banks.

The sites which had their offices searched by officials suspended operations after those searches. A source who spoke to India Today reportedly said that although online trading of bitcoins can come to a halt temporarily, some are still trading the digital currency with hard cash.

Fighting back against Indian officials

This means that at least for now, bitcoin users are fighting back against regulators and tax officials. Recently an association called the Bitcoin Alliance India was created. Also new bitcoin websites have popped up, like Madovercoins.com and Bitquick.in.

The former is an ecommerce site in India which only accepts payment in bitcoins and mainly focuses on non-residential Indians who want to purchase Indian products. The latter supposedly connects buyers and sellers of the digital currency directly with their banks, naming HDFC Bank, Axis Bank and others among those it connects with.

 

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
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