India banking industry and transaction is tightly controlled by the Indian central bank RBI. Indian exchanges are in constant fear of being shutdown due to uncertainty in regulation. Many of them are self regulated, some have had income tax raids, some have shutdown and opened again.

Indian media and banks seem to deeply concerned about money-laundering using bitcoin, which is ironical. There seems to be legitimate ways of laundering money like cash, hawala and real-estate(which most politicians in India are invested in). Bitcoin is the illegal way to launder money. The fact that transactions are publicly viewable for everyone to see on blockchain doesn’t matter.

Future

RBI hasn’t talked much about regulation regarding bitcoin. Last year it issued a statement saying blockchain technology can help check counterfeiting. My gut feeling is that RBI doesn’t want to make noise for such low volumes. When the volumes get big, things will get interesting.