Cryptocurrency industry facing tough phase in India: Experts

An expert involved with the money trade coin industry has said people continue to face problems converting crypto currencies into fiat currency or other crypto currencies because of existing firm government regulations.

"There was a time when money trade coin was seeing a bull-run during mid-January 2018. People made millions as profit by trading in MTCX (money trade coin exchange), but all of a sudden, we received letter from a financial institution that these transactions were not legitimate. Because of that letter, we stopped withdrawals and decided not to sell more coins," said Dr. Amit Lakhanpal.

Saying that the money trade coin community is passing through a tough phase, Dr. Lakhanpal further said, "We (those involved with the industry) were forced to migrate to trading platforms where the rate of the coin depends on buyer and seller."

Saying that the RBI notification is one among many reasons for this tough phase in MTCX, Dr. Lakhanpal, however, said, "We (have) managed to overcome losses when our coin was hacked and made sure that our clients have remained unaffected. Our company (Flinstone Technologies Pvt. Ltd.) has been affected by negative publicity spread across various platforms."

Dr. Lakhanpal said his company has taken an SBLC on lease (Standby Letter of Credit, which is an irrevocable documentary commitment, separate from a sales contract, issued by a bank to a third-party beneficiary).

"We have made it very clear from day one that we have taken a SBLC from market on lease which mentioned two conditions. First, MTC will get listed on any of the exchange public or private on 17th September, and second, when it is listed, it will be listed at base rate of 3 USD. Thereafter, its price will be determined on the basis market demand and supply."

"Separately, we (have) promised to come up with our own exclusive exchange or white label in which (the) general public will not be allowed to put their bid for less than 3 USD".. the trading price will be determined on the basis of demand and supply in which it is clear that only if we have a buyer, then sellers? coins will be redeemed and they (customers and clients) can take their withdrawals," he added.

"If we check the total sale of Money Trade Coin, around 65 percent of coins have been distributed free of cost as promotional tokens and another 15 percent is the additional bonus that people have got. So in short, only 20 percent of total coins are purchased coins," Dr. Lakhanpal said.

He was specific in saying that neither his company nor MTC have promised any returns in the form of fiat currency.

"We will settle all claims of MTC on CryptoZania by 15th June 2018 by disbursing the promised money trade coins?. To get money trade coin back on track, we are listing our coin on more than three exchanges in due course," he said.

"We have issued disclaimers and repeatedly issued warnings through our media interactions that investment in crypto-currencies has risks attached. We have never lured any individual or corporate entity for purchasing MTC," he said.

"We are trying to establish our presence in international market and are in the process of obtaining licences and offices in various countries. Those who have invested in crypto-currencies, fully understand its associated risks and potential for monetary gains and losses," Dr. Lakhanpal said.

In its April 6 notification, the RBI said, "Reserve Bank has repeatedly through its public notices on December 24, 2013, February 01, 2017 and December 05, 2017, cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.

In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs.

Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.

Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.

These instructions are issued in exercise of powers conferred by section 35A read with section 36(1)(a) of Banking Regulation Act, 1949, section 35A read with section 36(1)(a) and section 56 of the Banking Regulation Act, 1949, section 45JA and 45L of the Reserve Bank of India Act, 1934 and Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007.