Indian bitcoin startups form a blockchain association following RBI caution

A circular by the Reserve Bank of India last week, cautioning users about virtual currencies such as Bitcoin, may have led to an alarm among Bitcoin investors in the country, but for startups in this space, it has served as the right push for creating an industry association.

Bitcoin players such as Zebpay, Unocoin, Coinsecure and Searchtrade have formed the Blockchain and Virtual currency Association of India and are in the process of formally registering it.

In fact, in their first meeting in Mumbai on Friday, the members discussed the RBI circular among other things. “While we have been planning to create an association for some time, we finally pushed things after the circular,“ said Saurabh Agarwal, co-founder of Bitcoin trading and wallet company Zebpay.

“We had thought of reviving the old association -Bitcoin Alliance of India (formed in 2014 but now defunct), but we also decided to add blockchain companies and create a larger association,“ he said.

Currently, there are four member companies, but the association looks to add more from the 20 odd Bitcoin star tups in the country. Mohit Kalra, CEO of Coinsecure, said that the first attempt at a Bitcoin association had failed since the companies were still small.

The main objective of the new association is to create an industry body to engage with regulators, but the association will also focus on making Bitcoin trading safe by ensuring members follow strong KYC measures and by creating awareness among users about Ponzi schemes and other risks.

“The goal is to have a uniform self-regulation amongst ourselves,“ said Sathvik Vishwanath, cofounder of Blume Ventures-backed startup Unocoin.

Bitcoin is currently not regulated in India, and as per the RBI's notice on February 1, in which it reissued a circular from 2013, the regulator “has not given any licence/authorisation to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency .“

The RBI said that the creation, trading or usage of virtual currencies such as Bitcoins as a medium of payment are not authorised by any central bank or monetary authority. It also warned of threats to Bitcoin users from cyberattacks and illegal activities.

The warning comes even as Bitcoin's popularity in India seems to be on the rise, especially after its value rallied post events such as Brexit, demonetisation and Donald Trump's victory. It was also considered the best-performing currency globally last year.