Cryptocurrency bank plans India operations, takes cooperative route to get around RBI rules

At a time when the Reserve Bank of India (RBI) is wary of private virtual currencies, cryptocurrency bank Cashaa’s proposal to begin banking operations in India for customers of virtual currencies such as Bitcoin in August via the credit co-operative society route has raised eyebrows in financial circles.

In collaboration with the United Multistate Credit Co-operative Society, Cashaa has developed Unicas, the world’s first crypto-friendly banking institution with real branches in India. Cashaa founder and CEO Kumar Gaurav explained that it allows services for both crypto and fiat (currency) from a single savings account.

Customers would be able to get loans to buy cryptocurrency and start savings accounts through the “bank.” The government also intends to enact legislation to regulate cryptocurrencies. When asked if United has applied to the RBI for authorization to open a “bank,” Gaurav explained that the company is a multistate credit co-operative society that is “registered and functions under the Registrar of Societies.” “Because we solely provide services to members, we do not require RBI approval for this approach. The National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCU) is another member of United.

A credit co-operative society does not engage in banking; rather, it lends money to its members alone. The RBI has no jurisdiction over this society. The so-called bank’s promoters have chosen the credit cooperative path in order to circumvent the RBI’s stringent regulation and oversight. The RBI will not grant them a banking license. This society, on the other hand, can lend to its members. 

“I believe that starting a credit cooperative organisation or offering services through one is a more straightforward path than using private banking services. Itsblockchain.com founder Hitesh Malviya remarked, “I am sure they would have some form of limitations for clients on the banking side that would be interesting to watch out for.”

“As part of Cashaa, Unicas is helping to shape the future of Indian banking. “In India, we are launching personal accounts powered by CAS tokens with features like rupee and crypto savings accounts, as well as lending (loan against crypto and loan to buy crypto),” Gaurav explained.

“As a symbol of the liberation of money,” Gaurav said he planned to unveil it during Independence Week (in August). “By the end of this year, we will begin giving cards to account holders. All of these services will be available in our branches as well as through our online banking application,” he said.

Cashaa has built a hassle-free banking experience for crypto firms that are underserved by banks, according to him. “Today, we provide business banking to more than 250 crypto firms through more than five financial partners across three continents. Cashaa is pioneering the way for crypto-friendly global banking services (B2B) with our extensive network of partners,” Gaurav stated.

Uncertainty about the legal status of cryptocurrencies is causing concern among Indian investors, who possess around $1.5 billion (Rs 10,000 crore) in digital currencies, according to unofficial estimates. The government favours a digital currency backed by the Reserve Bank of India, which aims to pass legislation prohibiting private digital currencies.

Existing investors may be able to depart the market if tradable securities are banned, new investors may not be able to do so.

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