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Time and again, the Indian government, as well as the Reserve Bank of India, in various statements, has made it clear that cryptocurrencies are not a legal tender. However, things changed when the RBI on April 5 ordered all its regulated entities to stop extending any payments or banking services to crypto entity.
Since then, while more crypto transactions went darker, a slew of cryptocurrency exchanges including Koinex, Zebpay, Coindelta, CoinRecoil, and Coinome have suspended their operations citing unfavourable regulatory measures. Other crypto startups are also in the process of winding down operations or are feverishly looking for a solution from the government.
CoinRecoil’s cofounder and CEO Kunal Barchha who has also been fighting the legal battle against RBI and the government of India over the RBI notification, has now written an open letter to the Prime Minister Narendra Modi and Finance Minister Nirmala Sitharamani requesting them to reconsider their move of banning crypto (if they are).
The letter from the CoinRecoil cofounder is being reproduced below.
Dear Sir and Ma’am,
My name is Kunal Barchha, co-founder of a (late) crypto startup CoinRecoil. We filed a writ petition against the circular issued by RBI.
Mr Prime Minister, we elected you because we saw a leader in you, and not a politician. You have delivered a lot more than we expected, and we don’t really have much to complain.
However, there is a deafening silence on the future of crypto industry with regard to regulations, and this kills the dreams of budding entrepreneurs like us. I do understand the government’s concern over the anonymous nature of cryptocurrencies, and their possible use for money laundering or terrorist financing.
Also, RBI mentioned about their concern for investors. Without going much in detail, we all know how many companies listed on stock exchanges are transparent. Thousands of crores are lost in the last few years, as a few companies either defaulted, or their promoters ran away. Where was investor’s interest? Who is accountable for thousands of crores of investor’s money. Banks recovered all those money from average citizens by charging them ridiculous penalties.
Let’s not discuss about how banks operate. To quickly explain, my bank wasn’t charging anything for IMPS/NEFT/RTGS before demonetization. After the event, I am paying Rs.5 for every transaction, regardless of the amount. To put that in perspective, if I transfer 100/- to my friend, I pay 5% charge.
[Editor’s Note: NEFT/RTGS charges have been waived off with effect from July 1 after the letter from the CoinRecoil founder.]
The government also formed a committee to analyze this space. Honestly, I wasn’t surprised when they proposed a draft bill recommending a complete ban after their analysis. It was expected. But unfortunately there’s a huge generation gap between the technology and the brains that were trying to analyze it. They also went abroad to understand it.
Ironically, they never bothered to have a healthy discussion with the citizens of their own country. Does this mean they have more faith on skills and decisions of foreign regulatory bodies? Mr Prime Minister, with all due respect, I would like to let you know that India has the largest number of skilled software developers, one of the largest numbers of blockchain developers, and some of the sharpest and smartest entrepreneurs.
In the RTI filed last year, it was revealed that RBI didn’t do any sort of research before issuing the circular. Nearly 3 million people were utterly bereft of their money by that one piece of paper. Few of the government officials commented that the Finance Minister, Mr. Arun Jaitely repeatedly warn about its usage. Also, RBI cautioned the users about it.
My question is, why should an honest trader who wants to invest in something new, need government’s approval? That money belongs to him/her and s/he should have complete freedom to use it the way he/she wants to. The only condition is that the money should not be used for illicit purpose, as mentioned by the Finance Minister.
And, do you really think anyone who wants to launder money or finance a terrorist group will use an exchange and a bank account to buy Bitcoin? Every Indian exchange allows trading through registered bank account, Aadhaar card, passport, passport size photographs, and bank statements. Does RBI feel that any individual in his/her good sense will provide all these things to finance a terrorist? If that’s the case, I have nothing more to argue.
Bitcoin — it is a technological revolution, like internet and mobile. You either go with the flow or be prepared to get drowned. There’s no middle way out. And let me tell you this with all honesty, if there is a ban, I bet on my words, it will create a lot more headache for government than for the investors. Honest traders and investors already have many ways to circumvent that ban and buy bitcoin for long-term growth.
For people with evil intentions, they never use the exchanges in the first place. They may already have their different networks set up. The ban is guaranteed to give birth to a parallel crypto economy, similar to the one you tried to eliminate in your previous tenure.
Another thing is that why we always behave like followers? Why can’t we lead the world, especially when we have talent and skills to do that? Why are we always hesitant in trying new things? You have full majority, which means people trust you and your decisions. Why can’t the government encourage young generation to lead things that are hard for the government to understand?
All of us care for India as much as you do. And you may rest assured that none of the Indian exchanges wants their platform to be a reason for bloodshed or money laundering. They do everything they can to avoid it. And with proper government support, they can come with much better solutions that will reduce the government’s headache.
Friendly regulations and seamless banking support to crypto business will provide much more transparency to this incomprehensible nature of cryptos. Because if more and more people are transacting through banks and exchanges, even if someone uses it illegally, they can be tracked down from either of the exchanges. Because at some point, that particular Bitcoin may have passed through one of the legal channels. Government authorities will at least have a chain of transactions to follow. Imagine there are no exchanges, how will they find that chain? People start dealing through Telegram, Facebook, Twitter, or other peer-to-peer portals. How will RBI, ED, or any other government body track it down?
Given the capabilities listed here, I really doubt any of the government officials have the answer to this problem. Will they start banning Facebook, Twitter, Telegram, and any other means of communication? Won’t that be a dictatorship?
The only solution to all your problems is an open discussion with an open mind. The rigid attitude from either side isn’t going to solve any problem for anyone. If anyone wants to start a cryptocurrency exchange, he/she will leave India, but they won’t let their dream shattered just because few people don’t understand it. Or they don’t know how to contain it from illegal use.
And sir, much more black money is invested in real estate, gold, and cash. I know the demonetization initiative was to curb that, but let me tell you that powerful people had the privilege to convert old notes to new, just by making a phone call; it’s an open secret. It is always the average tax paying citizen who suffers. History is repeating itself with cryptocurrencies. Powerful people already have their routes set, but it is the average user who is trying to make money, or a budding startup that wants to disrupt with new technology that suffers. It’s a humble request, don’t let history repeat. Break the chain, take some risks, and let us lead the way forward.
You may not know that Indian IT companies are receiving new crypto projects every single day from the USA, UK, and other so-called first-world countries. Don’t you think it’s an irony that we work for pennies for them and after a year or two, our government officials visit these countries to understand this new technology? It’s insulting, demotivating, and demoralizing for us. We are often called cheap-labours in the IT sector, because our government does not believe in us to work for the country. Sorry to say this, but it’s a fact.
We tried to challenge the status quo. We didn’t have the money left after we developed our software. I have three personal loans to pay, just because we wasted one year fighting with the government and paying the legal fees. As a startup, we had limited funds, and a strict timeline. Everything was going as per plan, and we can say that our financial and time management was damn accurate, but government screwed us. Pardon me.
If you really wish to promote startup culture and Digital India initiative, every single minister, every single government body should be completely open-minded. You cannot restrict innovation to one’s comfort zone. If you keep doing the same thing every day, you get the same results every day.
Sir, I can go on and on, but I assume you may not have enough time to read so much. Have a healthy and open mind and think about it.
Kunal Barchha, CoinRecoil
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