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In a telling blow to the Bitcoin community, Apple has taken a policy stand to remove all applications from the app store stating that “they may not include content that enables, facilitates or encourages an activity that some countries deem illegal. App Store Review Guidelines require that apps be legal in all locations in which the app is available.”

Since there will always be some country in which Bitcoin may be illegal, this policy means that Bitcoin apps will go out of app store permanently.

The guideline may not be easy to follow in respect of all apps since there is no way Apple can ensure that no apps will enable illegal activity. After all the SMS application or e-mail itself can be used for illegal purpose. Similarly the Bitcoin can be used for both legal and illegal purpose. In this context the stand taken by Apple presumes that Bitcoin can be used only for illegal purpose and not for any legal purpose.

We need to observe if the popularity of Bitcoins is strong enough to make Apple change its guideline in the coming days.It would be interesting to see how the Bitcoin community responds to this challenge. If they fail to convince Apple, it is possible that in future some Governments may convince Microsoft that all Bitcoin applications must be blocked by Windows OS. This would be a back door way of banning Bitcoin.

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A Canadian resident Venugopal Badarawada has sent a notice to RBI seeking clarifications on RBI’s stand on Bitcoins, and opened a window of opportunity for RBI to come out with a clarification on its stand on Bitcons.

The earlier press release warned the public of the possible consequences of violation of law as well as the financial risks involved in dealing with Bitcoins. The warning given to public was in order since it is the duty of RBI to keep the public warned of such risks.

However while releasing the advisory, RBI also stated that they may review the regulatory structure by saying

“The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.”

It is the uncertainty that RBI has introduced through these lines that has invited the action of Mr Venugopal.

The undersigned has already clarified that at this point of time, Bitcoin is an “Electronic Document” as per Information Technology Act 2000/8 (ITA 2008) and hence carries “Legal Recognition”. If this “Legal Recognition” has to be removed, it would be necessary to amend ITA 2008. It is in this context that the undersigned has stated that RBI has no rights to ban Bitcoins.

This “Legal Recognition” of Bitcoins as per Section 4 of ITA 2008 makes it an “electronic document” which can be produced as evidence in a Court of law to whatever it represents. Whether this electronic document is a “Currency” or a “Commodity” or a “Derivative” is left to the community to decide based on their perception on its usage. For want of a better description, it is better to consider Bitcoin (as in deed any Crypto Currency) as a “Commodity in electronic form which the public may use for any legal purpose”. No other conclusion is logical.

It is true that Bitcoins can be used for money laundering and so is any other currency or commodity.  If RBI is concerned about money laundering usage of Bitcoins, it has to stop at giving such an advisory and say that Bitcoin is otherwise not illegal to mine, possess and transact.

RBI’s vagueness is detrimental to the constitutional right of an individual in India to carry on a business of his choice. If he wants to do business with Bitcoins, he has to presently live under the constant fear that RBI may at any time change the regulation and more so with retrospective effect and render him a criminal ab-initio. Hence RBI’s silence cannot be considered acceptable.

Since there is no other way that the public can force RBI into giving a clarification, Venugopal has rightly declared his intention to approach a Court to direct RBI to clarify.

In case RBI now comes up with a view that Bitcoin is illegal, it has to state the ground under which it is considered illegal. Merely the fact that the commodity is used by some as “Virtual Currency” may or may not be considered as sufficient ground to ban it. If however RBI takes such a stand the Courts can be moved to clarify if RBI is right. It is only when the Supreme Court gives its clarification on the matter that the issue would be settled.

Let’s wait for the RBI’s reply and further action that M Venugopal contemplates.

Naavi

Related Article

Updated on 3rd Feb: Reference in ET

The ongoing discussions in USA on Bitcoins has reopened the debate on how much the community needs to do to get the acceptance of Bitcoins by the main stream currency regulators.

There is one section of the community who profess by the anonymity of bitcoin transactions and would like to promote Bitcoins with no concern for the regulator’s worries on money laundering. However this approach may be self defeating.

On the other hand there is a growing section of Bitcoin owners who don’t mind a mild regulation which may permit identity of the owners of Bitcoin be revealed to law enforcement if need be. They may prefer a Pseudonomous system rather than an anonymous system.

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The undersigned is interested in the community working towards a self regulatory mechanism that brings more respectability to the system and avoids confrontation with the regulators.

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A Canada based NRI has demanded that RBI cannot be ambiguous on its policy on Bitcoins. Mr Venugopal, an NRI has caused a notice to be issued to RBI that the RBI circular on Bitcoins is vague and creates confusion in the industry.

A legal notice has been issued and RBI is expected to come up with its response.

See Report in DNA

Naavi

The global economic forum seems to have found time to discuss the emergence of Bitcoins. It is reported that Mr Uday Kotak of the Kotak group in India has suggested that crypto currencies need to be taken note of.

A brief report is here. 

Naavi

As was expected, Swiss Banks who lead the world in laundering unaccounted money have moved fast to ensure that its black money balances which includes balances worth US$ 1.4 trillion of Indians are not drawn out of the country. It is reported that they are advising their clients to convert their holdings into Bitcoins.

See Article here

May be the Swiss authorities have seriously considered the possibility of Mr Narendra Modi coming to power and implementing his promise of bringing back black money of Indians back to the country.

While the news about Swiss Banks promoting Bitcoins  may be good for the Bitcoin industry since the present market capital of bitcoins is about US$ 12 billion and even a fraction of the Indian’s Swiss Bank deposits converted to bitcoins would give a large boost to the exchange value of the bitcoins.

However in the long run this development may not be good for Bitcoins in India. Once the conversions gain pace,  Bitcoins will permanently be branded in India as the currency of the tax evaders and the possibility of the Bitcoins being officially recognized would recede further.

I urge RBI to therefore move quickly and declare its policy on crypto coins and also develop suitable strategies to ensure that the efforts of those who want the Black money to be brought back to India for development purposes is not thwarted.

In case Mr Modi and his team are alert to these developments, it is time that they also develop their “Cyber Policy” which includes the “Crypto Currency Policy” and make it part of their manifesto.

Naavi