India's first Bitcoin exchange: the Unocoin story, from a Bangalore meetup to the Supreme Court

Unocoin is India's first Bitcoin platform. It was started in Bangalore in 2013 by a small group of people who had been running Bitcoin meetups in the city, and it has operated ever since: Unocoin Technologies Pvt. Ltd., based in Rajajinagar, Bangalore. It stayed open through the RBI's 2018 banking cut-off, was part of the case that overturned that cut-off in the Supreme Court on 4 March 2020, and today states it has more than 2.26 million verified users. It is registered with FIU-IND as a reporting entity under the PMLA.

I am one of its co-founders. The short version above is what you can check. The longer version is the one I lived, and it explains why the company is built the way it is. Here it is.

A robotics salesman in Bangalore

Before Bitcoin, I spent eight years at Quanser, a Canadian company that builds robotics and control systems for universities. Around 2011 and 2012, that job brought me to Bangalore to sell robots.

Somewhere in that period I read the Bitcoin white paper. A short paper, written by someone using the name Satoshi Nakamoto, describing electronic cash that moves between people without a bank in the middle. I was an electrical engineer who had spent years building systems that had to work in the real world. This one looked like it would.

In Toronto there were Bitcoin meetups. In Bangalore there weren't. So I started one.

The meetups

We began small, in coffee shops, a few curious people at a time. Then it kept going. I ran meetup after meetup, more than a hundred of them by my count, and they became India's first Bitcoin meetups.

The people who came were engineers, students, traders, people who had read something online and wanted to know if it was real. The conversations were good. But one question kept coming up at the end of every evening.

How do I buy it?

Why we built an exchange

I didn't have a good answer. I had to point people to Mt. Gox in Japan, or to a new company in the United States called Coinbase. Neither was built for an Indian buyer with an Indian bank account.

So we said: let's do something better. Something built for India, and built to stand the test of time. The meetups grew into a conference in 2013 at the Sheraton in Bangalore, and that is where Unocoin launched. The company started in December 2013.

From the first day, we decided one thing about how we would operate. You can't run from the government. They exist, and you have to deal with them. Our rule was simple: never break the rules, never be offside. Everything that happened next tested that rule.

Day three

I remember the third day of our business. We had two employees. About thirty people from the tax department showed up at our office.

A couple of weeks after launch, as I remember it, the RBI posted a notice warning people about virtual currencies. It repeated that kind of warning later, and then a third time in 2018. The RBI had been issuing cautionary press notes since 2013, while there was no law banning Bitcoin.

None of that was a surprise. A new kind of money was arriving in a country with a strong central bank. We expected to be watched, and we were. We answered every question and kept going.

2018

On 6 April 2018, the RBI issued a circular telling the banks and other entities it regulates not to deal in virtual currencies, and not to provide services to anyone who did. Those already providing such services had three months to exit the relationship.

For an exchange, that meant losing the bank accounts that let customers move rupees in and out. We had to lay off around a hundred people just to survive. There were tears everywhere. I still think about those days.

Some companies left India. We stayed, and we went to court. Our Supreme Court page has the full detail of the circular and the case.

During those years Unocoin was in court and making very little money. Around then, Kraken's founder offered me a job, and I became Kraken's first head of global business development. I kept fighting for Unocoin while I did it.

The judgment and after

The case was Internet and Mobile Association of India v. Reserve Bank of India. It combined the industry body's petition with one from crypto exchange operators, shareholders, founders and traders. Unocoin was part of the case that challenged the ban.

Near the end, as I remember it, the judges wanted to see a real person whose rights had been affected, not only companies. Our business was put under the microscope. On 4 March 2020, a three-judge bench, with the judgment written by Justice V. Ramasubramanian, set the circular aside as disproportionate. All three judges ruled in our favour.

I honestly thought we would lose. A small Bitcoin company against the people who print money in the most populous country in the world. That is not usually how those fights end.

The judgment did not make Bitcoin official money and it did not create a regulator. The Court accepted that the RBI has the power to regulate in this area. It said this particular measure went too far.

Tim Draper had been watching. Draper Associates led Unocoin's Series A, reported on 7 October 2020. Today Unocoin is backed by Tim Draper, Barry Silbert and Blume Ventures. The Drapers call us cockroaches, because we are never going to die. I take that as a compliment.

The email we deleted twice

One more story, because it says something about those early years. In 2014, an email arrived from a stranger offering to invest in Unocoin. My co-founder, who runs the company as CEO, deleted it. It looked like every scam we had ever seen: someone offering money, out of nowhere, to a small Bitcoin company in Bangalore.

The sender wrote again. Deleted again. The third time, he explained that he was an investor in Coinbase and BitPay. It was Barry Silbert, and he became one of our backers.

I still tell that story to new users, for the opposite reason you might expect. My co-founder's instinct was right. Unexpected offers of money or help are how most scams begin. Checking twice cost us a few days. Not checking costs people their savings.

What 13 years taught me about trust

We are still here, about thirteen years later. In that time India's rules have grown around this industry: a flat 30% tax on VDA gains and 1% TDS since 2022, VDA businesses brought under the PMLA in March 2023, and platforms reporting transactions under the Crypto-Asset Reporting Framework from 2026. We register, we report and we deduct, because those are the rules.

The lesson I take from those years is that trust is not a feeling. It is a list of things you can check:

• Is the platform on FIU-IND's list of registered reporting entities?
• How long has it operated, and through what?
• Does it say where assets are held, and does it show evidence or only claims?
• Does it deduct TDS and report properly?
• Does anyone from it ever ask for your OTP, password, PAN or seed phrase? (Real support never does.)

Some of what Unocoin says about itself, such as holding 95% of assets in cold storage with multi-signature wallets, is the company's own statement. There is no independent public attestation of it on our site, and I would rather tell you that than ask you to take it on faith.

And whatever platform you use, you can always move your Bitcoin to your own wallet. That option is the point of Bitcoin. On Unocoin it is called Asset Controls, with zero-fee transfers.

If you want to judge Unocoin the way I would judge any platform, start with our page on what you can verify about Unocoin. If you decide to start, the Bitcoin SIP page explains how a ₹10 plan works.

Keep reading

Sources

• RBI circular, 6 April 2018
• CryptoSlate, IAMAI v. RBI summary
• Oxford Business Law Blog on the judgment
• The Block, Unocoin Series A led by Draper Associates (7 Oct 2020)