Why India’s Bitcoin Millionaires Are Hiding

Sitting next to me on the table, is possibly one of the few Bitcoin millionaires in India. I can’t be sure, because he won’t tell. “It’s like asking how much money do you have in your bank account,” a Bitcoiner tells me. Going by some members of the Bitcoin community, he is easily a Bitcoin millionaire. 

Hiding Face

To anyone else, outside of the small geek heavy world of Bitcoins, he could have passed off as another techie. Average built, tall by Indian standards, and well spoken. Nothing seemingly extraordinary about him. Except, that he was one of the very few Bitcoin enthusiasts in India in the days when you’d have to pay less than a Rupee to buy one. It costs nearly $933 (about Rs 58,000) to buy a Bitcoin today.

In the last few months, his life has changed, like no one would have ever imagined. Our man, one of India’s first Bitcoin millionaires by estimates, wants to remain unnamed. The name isn’t important to me. But let’s call him Orwell.

Bitcoin Theft

There are other, more worrying reasons for his reclusivity. Orwell’s recent escapade in Andhra Pradesh is one. “They wanted me to sell a bulk of my Bitcoins and I said no way! Things got a bit nasty,” he said. The middle-aged man doesn’t seem to be buillshitting me to show up the value of his investment.

I’m not scared, says Orwell, who has been talking to other Bitcoin millionaires and doesn’t like what he’s heard. “I know what kind of attention comes from it and I don’t like it,” he said.

Bitcoin theft, ranging from elaborate burglaries to snatching, is popular these days. For instance, in December last year, a Bloomberg TV reporter’s Bitcoin gift card was stolen while he was showing it off during a live broadcast. It only took 10 seconds before he was relieved of his Bitcoins. More violent and sophisticated means are prevalent in the world of Bitcoins.

Regulators acting weird

Another reason most of them won’t come out is because regulatory bodies in India have also not been charitable to Bitcoin users. India’s central bank cautioned in December that virtual currency could be risky. The Reserve Bank of India said that there could be potential financial, operational, legal, customer protection and security related risks that virtual currencies pose.

Close at the heels of RBI’s warning, the Enforcement Directorate raided some Bitcoin operators in India. Mahim Gupta, whose website BuysellBitco.in had a turnover of $200,000 a month, was at the receiving end. His website suspended operations.

Legal Showdown?

Indian authorities contest that Bitcoins violate the foreign exchange regulations of the country. Enforcement directorate estimates value of the transactions to be around Rs 20-30 cr.

However, Bitcoin cannot be considered as a “Foreign” currency since there is no “Cyber Nation” recognized in Indian law and also since Bitcoins can also be produced locally in India itself, says  Na Vijayashankar, an Information Assurance consultant based in Bangalore. Vijayshankar, who has studied the legal aspects of Bitcoin in India, says that if the directorate does not clarify the nature of the asset about which they have objection, their action would be arbitrary and fit to be questioned in a Court of law.

The Bitcoin Alliance in India has commissioned Nishith Desai Associates, a law firm to find legal backing for the virtual currency.

Singapore Shows the Way

Earlier this month, tax authorities in Singapore put a giant smile on the face of Bitcoin users across the world. The country came out with clear guidelines to tax Bitcoins. This is being viewed as the first step towards governments accepting Bitcoins. Here’s what they had to say:

Companies which are in the business of buying and selling bitcoins will be taxed based on the gains from their sales of the bitcoins. On the other hand, if the bitcoins are part of the company’s investment portfolio acquired for long term investment purposes, the gains from the sales will be capital in nature and thus not taxable for the company.

It seems like a long road ahead for Bitcoin in India. Until then, these millionaires will have to stay away from the limelight.

If you are new to Bitcoins, read: Bitcoin 101: Five Things You Must Know About Bitcoins.

Image Credit: Sutterstock

Add comment

NextBigWhat brings you curated insights and wisdom on product and growth from the wild web.

Over 2 million people receive our weekly curated insights.

Newsletter

Newsletter