Despite some early moves that raised questions about Bitcoin’s legality in the country, the Indian market and its sheer size is still enticing to investors.
Barry Silbert, a longtime Bitcoin enthusiast and founder of SecondMarket, just invested $250,000 in Unocoin. The company, which handles trading, merchant processing and storage for the currency, is based just outside Bangalore in Tumkur, India.
With 1.2 billion people and one of the widest income inequality gaps in the entire world, India has a population that is more than 40 percent unbanked. At the same time, it receives about $70 billion annually in remittances.
So Bitcoin could fill a market gap by offering lower fees on foreign exchange than traditional remittance providers like Western Union. Sathvik Viswanath, the company’s co-founder, had been running some mining operations until he shifted toward this model. It appears to mirror what companies like Coinbase do in operating as dual wallet and merchant processing providers, but with a specific focus on India and its unique logistical challenges.
Unocoin requires consumers to send in their PAN or Permanent Account Number cards and charges a fee of 3 percent for buying and selling the currency (which is higher than what you typically see with U.S. focused companies).
While the Reserve Bank of India initially put out a warning against buying or selling the crypto-currency, the deputy governor of the bank later said that he had no plans to regulate the currency.