Crypto bank takes cooperative path to set up operations in India
But Cashaa’s decision to take the credit union route to start banking for virtual currency customers raises several issues.
The decision by cryptocurrency bank Cashaa to go down the cooperative credit society route to launch banking operations in India for virtual currency customers raises several issues, according to a report.
Cashaa has launched Unicas – a joint venture between Cashaa and United – which claims to be the world’s first crypto-enabled financial institution with physical branches in India, in partnership with the United Multistate Credit Co-operative Society.
The company will offer personal account services in India, including savings accounts for Indian rupees and cryptocurrency, loans for the purchase of virtual currency, loans for cryptocurrency and card services.
The Supreme Court order overturned the Reserve Bank of India’s (RBI) ban on cryptocurrency last year, but banks continue to warn customers against using their services to trade virtual currencies.
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“Recently Indian banks appear to be cracking down on cryptocurrencies and exchanges even though India has not formally banned cryptocurrencies. Indian crypto exchanges are struggling to maintain fiat as banks stop transfers to crypto-related accounts. As a result, these exchanges are now looking to Cashaa to maintain their fiduciary services, ”noted Cashaa.
When asked if the company has sought permission from the RBI to start a “bank,” Cashaa Chairman Kumar Gaurav said United is a multi-state credit union. “As we only offer our services to members, we do not need RBI authorization for this model. United is also a member of the National Federation of Urban Cooperative Banks and Credit Companies Ltd (NAFCUB) under number 1753 and ISO 9001: 2008 certified for quality management systems, ”he told The Indian Express.
A cooperative credit society is not allowed to carry on banking activities. Instead, it only lends money to its members. “This company does not report to the RBI. The promoters of the so-called bank are taking the credit union route to avoid strict RBI regulation and control. They won’t get a banking license from the RBI. However, this society can lend to its members. It can still create systemic risk for the financial system, ”a banking source said. Indian express.
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“I think opening a credit union or providing services through them is an easier route than going through private banking. I’m sure they would have some sort of limitation for customers on the banking side. It would be interesting to watch ”, Hitesh Malviya, founder, itsblockchain.com, the newspaper said.
“As Unicas is part of Cashaa, we are working on the future of banking in India. We publish personal accounts in India powered by CAS tokens with features like savings account for Indian rupee and crypto as well as loans (loan against crypto and loan to buy crypto), ”said Gaurav.
“We will come to India next month [in August]. We will be launching personal bank accounts so that personal traders can do peer-to-peer trading. Cryptocurrency traders will be able to transact without worrying about their bank accounts being frozen, ”Gaurav said.
The RBI has warned people against virtual currencies on several occasions, but is considering launching its own digital currency. “The central bank’s digital currency is a work in progress. The RBI team is working on it, technology side and procedural side… how it will be launched and deployed, ”said RBI Governor Shaktikanta Das recently.