Two recent events caused concerns in the Indian bitcoin community.The CEO of the bitcoin trading platform Unocoin has been interrogated by Indian authorities.Bitcoin exchange BTCXIndia is closing due to the loss of a banking partner.In a thread on Bitcointalk forum that started on 4 May, 2015, Sathvik Vishwanath, CEO of Unocoin (the user dashingriddler) said that he and his team were summoned by the authorities to give explanations about bitcoin and their company.He asked forum members to help him find articles or blog posts “which could reinforce our argument saying bitcoin is good by itself and is here to stay”.However, according to Sathvik, the authorities were not interested in positive reviews of bitcoin, especially of foreign origin.They did not like the idea that bitcoins could come to India bypassing the regulated route and be exchanged for Indian rupees.Finally, they asked Sathvik and his colleagues: “Where exactly can I see what you are doing is legal in India and you are not violating any regulation?” According to a recent research by the prominent Indian lawyer Nishit Desai who also works for Unocoin, bitcoin is legal in India because it is not declared illegal.

It seems that the authorities in question (Sathvik said he could not disclose who they were) might have an opposite approach: bitcoin is illegal if it not declared legal.As for the money inflow in India, one of the forum users said it reflects the general preoccupation of the government “about every rupee that is flowing into the country”: foreign funding of Indian companies is seen as means to destabilize the country.A forum member expressed his fears to lose his money and even go to jail just for being the Unocoin customer if bitcoin is declared illegal in India.Other forum members were quick to establish the link with another recent event, BTCXIndia announcing its planned closure.The bitcoin exchange, launched in May 2014, has to cease operation because their bank told them “they will no longer serve bitcoin businesses”.Left without a banking partner, the company that was always keen on following anti-money laundering regulations, just cannot continue to function.It urges all its customers to withdraw their funds before 20 May.

“We have investigated the possibility to operate through other banks, but it seems this is a general policy in India as of today,” said the company.It also expressed hopes that regulatory situation would eventually become clear in India and it would be able to open again for trading.However, Sathvik does not believe there is any link between the two events.According to him, BTCXIndia were just unlucky with their banking partner while all the banking connections of Unocoin are secure.He also asked forum members to not be nervous because no data concerning Unocoin customers has been given to authorities and he continues to make “best possible efforts to safeguard the interests of bitcoin community in India”.In February 2015, I wrote an article Coins.ph offers remittances to Philippines using Coinbase.The end result of the article was receiving approximately 54+ comments out of which 50 or so were downright abusive.I almost debated if publishing this article was going to be worth it.

After much thought I have decided to go ahead with it without citing any names.Draw your own conclusions.Over the past couple of months, a lot many Bitcoin Remittance (Rebittance) companies have sprouted up (a curated list of all bitcoin remittance companies can be found here).irs bitcoin guideLicensed MTOs (Money Transfer Operators) are crying foul.bitcoin pros vs consBecause the legality and licensure of these Rebittance companies comes into question.bitcoin in tamilBuying & Selling of Bitcoins is okay (unless you’re Bangladesh which has outright banned the trade of Bitcoins).litecoin electronic walletNow most MTOs don’t have a problem with that (and presumably, neither do the regulators), but when Bitcoin startups enter the domain of remittance, the waters get murky!bitcoin core crash

Personally, I believe in a free system, yet this is not meant to be a contradictory statement, the law is the law.If money-transfer services requires a license, then where exactly do Bitcoin Remittance companies stand?bitcoin over nfcor are they operating illegally?I posed the question to the regulators of five countries, and their answers are as follows: What the regulators are clearing citing that if a bitcoin company engages in the activities that are similar to that of a money transfer service, the operation requires a money transfer license.This is pretty much the standard answer of almost every regulator you ask of in the developing world.Wallet providers cite that it is the user that is circumventing the system by using it for remittances, whilst others, clearly position themselves as entities that are engaged in Bitcoin transfers.If a licensed MTO in the United States does a pure Bitcoin-to-Bitcoin remittance to say Kenya, is this legal?

The law can be murky here.According to my interaction with the Kenyan Central Bank, the answer was that the Kenyan Central Bank has decided not to interfere as yet into regulating bitcoins.However, they were concerned with the unlicensed companies who were engaged in the value-transfer into Kenya.Startups in Kenya argue that Bitcoin is not regulated hence, they are exempt from obtaining a money transmitter license (equivalent) in Kenya.The regulators see it differently, and I quote: “if the value transfer is in Bitcoins or Fiat, it does not matter.If the company is engaged what we deem to be money transfer (i.e.remittances) the Kenya Money Exchange licensing would apply to them” Likewise, in the United States if a company from say Philippines is providing a system that upon review mimics a money transfer operation, and they allow US clients to be on-boarded, then this company (in the Philippines) is deemed to be a money services businesses in the eyes of FinCEN.Hence it needs to have Money Transmitter Licenses to be able to on-board US customers.

In addition to this, registration with FinCEN is mandatory.Merely saying that your system is being abused or misused for remittances is not good enough.The federal regulator has the view point that if your website is shown to say 20 people and after review by them, these 20 people are asked what does the website do and if they reply “money transfer” then you’re in trouble.These grey issues are of grave concerns to the regulators in the US, in the terminating countries and the investors.Do the same regulations hold true if Bitcoin is used for value-transfer between two licensed entities?The answer is, it depends.I got the opportunity to view two investor presentations by two leading bitcoin remittance companies that were presented as recently as November and December 2014.I can sum it up very eloquently: Marketing Bullshit!There is so much misrepresentation of the facts and opinions that it almost made me laugh.Ignorance of the law amongst the investors is one prime reasons companies get funded.