On December 31, 2017, we posed a question to Mr Modi. ” Modi is yet to open his third eye on Bitcoin, the new alternative to Black Money…Will he wake up in 2018?”
Now that Mr Modi has the mandate for Modi 2.0, will he at least now open his eyes?… is the question we need to ask.
In October 2018, Nasscom chief said Bitcoin is illegal. In November 2018, we called upon the Supreme Court to declare Bitcoin as illegal..
But the Supreme Court has not so far displayed the courage to declare Bitcoin as illegal. It has hidden behind technicalities asking the RBI to give its views or the Government to give its views. It clearly appears that the Supreme Court is reluctant to say the obvious. We can speculate why.
We have written scores of articles on this site on how Bitcoin is a Currency of the Criminals and Terrorists, and needs to be declared illegal and banned. We have discussed how legalizing Bitcoin will destroy the Indian economy, give China a handle to manipulate India. We have also highlighted that banning Bitcoin (along with other privately held Crypto currencies) is essential for choking the Dark Web. We have teased Mr Arun Jaitely and Mr Modi for not taking a decision.
But the decision to ban Bitcoin is yet to come…
We have to now start questioning whether the Government has an understanding that “Bitcoin is the Black Money of the Digital World” and “Demonetization of physical currency was thwarted partly because of the availability of Crypto currencies” or there are any other reasons why there is a policy paralysis in this regard.
Now even before the Modi 2.0 takes over, I see the Bitcoin lobby at work. An article was circulated today under the title “Supreme Court Advocate suggests how to regulate Crypto in India” . The article appears in bitcoin.com and it is easy to note the vested interest of the publisher.
As per the article, some comments have been made in support of the continuation of the monster called Bitcoin and I would like to counter these points.
Comment 1 : “The right regulatory framework would ensure transparency, oversight and accountability”
Counter: Regulation pre-supposes recognition of Bitcoin as a currency. We cannot regulate some thing which is not recognized.
Under Indian law, Bitcoin is an electronic document and since it is not included in the schedule I of ITA 2000/8, it is not de-recognized as an electronic document under Section 1(4).
But the use of Bitcoin as a “Currency” is ultra vires the RBI Act.
Any body referring to this electronic document as “Currency” exchanging it to Rupee or other currencies, using it to barter with other goods with the description of Bitcoin as a currency are violating the RBI Act.
Any promotion of Bitcoin as a “Currency” and a legal tender should also attract penalties under the law (IPC) for “Cheating” amongst other things. Any person assisting in the exploitation of the concept “Bit coin is a currency” and its promotion are liable for criminal conspiracy to cheat.
These penal provisions apply even to the publications and authors who are promoting the idea that Bitcoin is a legal tender.
Since the concept of “Bitcoin as a currency and legal tender” is ultra vires the Indian law, any regulation can only be to clarify and state that “Bitcoin is illegal”. There cannot be a regulation of narcotic drugs and arms trade by people except to say that they are illegal. The same applies to Bitcoin.
This can be done by just adding an explanation in the Schedule I of ITA 2000/8.
The MeiTy need not wait for July 23 when Supreme Court has to give its views on the case. It can act even now in under its administrative powers and get it ratified once the Parliament is convened. If the department has any other view, it is just an excuse.
Comment 2: “Explicit terms of functioning for such exchanges can regulate the kinds of virtual currencies that may be traded, the modes and methods of reporting, the restrictions on trading (including on valuation spurts etc.,) and also investor protection provisions can be incorporated,”
Counter: Since the commodity which is the subject matter of exchange is illegal, the exchange activity will also be illegal. No further discussions are warranted.
Comment 3: There is also debate on whether cryptocurrency can be banned at all. After all how would the government enforce it without infringing on the privacy of all. Any form of electronic device may be used to store crypto currency.
The defense of “Privacy” for illegal activity is untenable. Privacy is the right of a law abiding citizen and if there is any prima facie doubt that a person may be holding or trading in illegal currency, the argument of Privacy cannot save him. No Privacy law recognizes this right.
Enforcement is the responsibility of the Government. Argument that it is difficult is not a valid excuse. Any form of electronic device can be used to commit phishing or online frauds. Can we therefore regularize Phishing?
Comment 4: Unless we hear something concrete from our finance department I don’t think it’s going to affect existing traders.”…”By closing out the banking route, the Indian government merely pushed the entire market into the cash system thereby making it more opaque and impossible to track or trace”
Counter: This is an admission that Bitcoin exchanges in India are continuing to do business even though it is prima facie evident that it is not legal. We even saw one company putting up a Bitcoin ATM in Bangalore to run a havala operation of exchanging rupees into Bitcoin. The Government needs to take deterrant penal action to curb such illegal activities continuing.
Comment 5: It is likely the bill will take some time to become law, even if the government decides to introduce the same in the Lok Sabha, and certainly not before the next supreme court hearing on the issue in July, which might provide some clarity on the issue.
Counter: It is clear that the Bitcoin lobby is counting on a favourable judgement from the Supreme Court. This gives room for the speculation that the Bitcoin lobby may try to fix the judges.
We need to specially watch out for any irrational judgement that may come out which may confirm this suspicion.
People are watching and Supreme Court should recognize if it is coming either under duress from parts of the industry or under the influence of any illegal gratification or promise thereof.
Since the future of many political parties may be involved in the legalization of Bitcoin, the highest level of influence would be brought to bear on the Court and the Court has to treat this as a sensitive case and handle it with a commitment to the national interests.
Comment 6: many countries such as the U.S. have chosen to regulate crypto assets instead of banning them. With every change that USA has brought about, other countries including Singapore and Japan have followed suit,
Counter: We are aware that many countries have legalized drug trade or arms trade. It need not guide our movement to eliminate black money from the system.
If we need to remove black money, we need to remove it even from the digital space. We are not concerned with what other countries do.
In fact, it is my sincere desire that Mr Modi extends his fight against Black Money to the global scenario and takes up the issue of outlawing privately held Crypto currencies across the globe. A consortium of like minded countries need to be formed. This should help several countries in Africa and elsewhere where there is terrorism and insurgency which requires drug trade and arms trade to go unhindered.
Comment 7: India’s population and young demographic being a substantial part thereof is reason enough for the government to take a definitive stance, the advocate told the news outlet. “Else a large young risk intensive population may have already entered the crypto-asset market and may then be left adrift with no remedies or solutions.
Counter: Definitive stance…yes. But only to criminalize the holding and use of Bitcoins.
Otherwise the argument is similar to that of Mehbooba Mufti that “Stone Pelters of Kashmir are misguided youth only and should not be punished.
If the misguided youth or others have already committed a crime, there is no need to protect them with a favorable law now.
They can always be given an opportunity to declare their holdings, account for it, surrender it and then allow them to escape criminal penalties.
Comment 8: The National Association of Software and Services Companies (Nasscom), a nonprofit trade association of the Indian information technology and business process outsourcing industries, is among those that have urged the central bank to consider allowing crypto companies to participate in its regulatory sandbox.
Counter: This is a misguiding statement. Nasscom chief has admitted that Bitcoin is illegal. There is no need for any experimentation in the sand box of regulations. This will be a strategy like the proverbial Arabian Camel in the tent.
Comment 9: Since cryptocoins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox.
Counter: This is another fallacy being spread by the lobby. Block Chain technology as has been used in Bitcoin has no use in any regulated activity. The Private Blockchains are a technology which are a fancy name to some thing which is already known and is being used. Hence there is nothing to be gained by shielding Bitcoins under the garb of testing Block Chain technology.
Counter 10: Payments Council of India (PCI), the payments industry lobby group, has also urged the RBI to include cryptocurrency businesses in its regulatory sandbox, according to the Economic Times. Naveen Surya, chairman emeritus of PCI, believes that “Since there is no outright ban on cryptocurrency technology, it should form part of the sandbox,”
Counter: The article quotes the Chairman Emeritus of PCI. I look forward to the view of the current management of NPCI.
I will be raising this issue both with the NPCI and PMO to confirm the view of NPCI. If there is any support for Bitcoin, I will not have the hesitation to call that it is wrong.
Counter 11: India should really look clinically at formulating simple regulations to meet its unique socio-economic milieu and lend support for developing the technology.
Counter: All the fancy words only mean a support for the Criminals to run their domain with a currency which cannot be traced by the legacy Governments. This currency supports the Dark Web, the exchange of Crime ware, collection of ransom in ransomware attacks. It can be and is perhaps is being used for paying terrorist sympathizers in India including the political parties by our enemies across the border.
What Needs to be done
Hence there is no need to show any mercy on the Bitcoin. It must be banned. Any person holding the Bitcoin should be considered as “Attempting to commit a money laundering offence” and booked accordingly. A small window may be given for voluntary disclosure when the crypto currency balances are surrendered for confiscation to the Government in convertible legacy currency and such persons can be exempted from criminal punishments.
I list the “Banning of Crypto Currencies” (Privately managed) as the unfinished agenda of Modi 1.0 and urge Mr Modi, Mr Amit Shah and whoever becomes the Ministers of Home, Finance, Law and IT to take appropriate steps to ban Bitcoins forthwith.
I will forward this article to my MP besides the officials of NPCI and the PMO and seek their comments. If NPCI does not counter what is stated in the article, it can be presumed that they endorse the view mentioned…..Let us put their commitment to remove Black Money to test.
I am sure that this article will not be liked by many of my friends. I have explained elaborately in my previous article of exactly this possibility and given my reasons why I still express such a view in the interest of the nation.
I hope a majority would share my view. What matters however is…
Will Modi 2.0 share the same view?