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Law Commission of India Recognizes Cryptocurrency as Means of Electronic Payment

The Law Commission of India has recognized cryptocurrency as a means of electronic payment. The pronouncement came during the Commission’s recent feasibility study of the legality of online gambling in the country. Cryptocurrency enthusiasts in India will most likely welcome this news given the negative view held by many government officials towards virtual currencies.

Law Commission Groups Cryptocurrency with Electronic Payment Channels

According to a report issued by the Law Commission:

Gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, virtual currencies (VC, or cryptocurrency), etc.

The idea of cryptocurrencies gaining any form of recognition is one that appeals to crypto enthusiasts in the country. Commenting on the ruling, Nischal Shetty, the CEO of WazirX, a local cryptocurrency exchange platform said:

It is the first time that a body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction. Therefore, it is a very positive sign, especially considering the report has come out after a lot of deliberation.

Presently, virtual currency regulation is a significant topic in India. The Reserve Bank of India (RBI), the country’s apex bank, has prohibited local banks from facilitating cryptocurrency transactions in the country. This situation has led to a public outcry with multiple suits filed to challenge the RBI ban.

The Supreme court after having heard preliminary arguments on the case recently fixed September 11, 2018, as the date for delivering its decision on the matter.

Regulation is Better than Prohibition

The ruling offered by the Law Commission of India throws into sharp relief an important debate of which is more desirable – regulation or prohibition. The Commission’s mandate was the examine the case for legalizing betting while treating match-fixing as a criminal offense.

The same principle could also be applied to the government’s stance on cryptocurrency and the RBI ban. Commenting on this analogy, Tuhina Joshi, an associate at TRA Law, a firm with many cryptocurrency exchange platform clients, said:

The law commission recommends that regulating gambling is preferable to an outright ban. This is the same argument we are making in [the] context of cryptocurrencies.

Do you think the ruling of the Indian law commission will lead to a reversal of the RBI ban? Let us know your thoughts in the comment section below.

Image courtesy of the Law Commission of India

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D-Day in India as Supreme Court Begins Deliberation on Cryptocurrency Ban Today

Today (July 20, 2018) is an important day for the Indian cryptocurrency market as the Supreme Court resumes its hearing on the suit filed by crypto exchanges against the ban by the Reserve Bank of India (RBI).

Supreme Court Resumes Hearing on RBI Ban

After dismissing suits filed to halt the RBI directive, the Supreme court will now hear the matter concerning whether the RBI ban constitutes a violation of the country’s constitution. Chief Justice Dipak Misra as well as justices DY Chandrachud and AM Khanwilkar will hear the case.

KK Venugopal, the country’s attorney general, will also attend the hearing based on an earlier court directive. According to inside sources familiar with the case:

The union government is also a party in some of the cases, so that may be one of the reasons for calling the AGI. But it also clearly shows that the court thinks it’s a significant matter.

The Supreme Court’s proceedings should settle the government’s stance concerning crypto as well as the RBI’s position on the matter. There is no timetable yet for when a final verdict is to be expected. Commenting on the expectation of cryptocurrency exchange platforms in the country, concerning the case, Rashmi Deshpande, a lawyer representing on the plaintiffs said:

Our expectation is that the hearing will be on the basis of merit where we get to present the case on why the RBI circular is unconstitutional and should be quashed.

The RBI Cryptocurrency Ban

The Indian apex bank instructed banks to cease all transactions with cryptocurrency exchange platforms on or before July 2018. The platforms responded by challenging the ban in court claiming that the RBI’s actions were discriminatory and against the constitution. Some platforms even sought a stay of the prohibition pending the resolution of the case, but the Supreme Court dismissed their motion.

The apex court had also instructed the exchange platforms to engage in constructive dialog with the RBI. To this end, the bourses have tried to convince the RBI to take a more nuanced approach to its policies. The platforms even promised to commit themselves to increased scrutiny to comply with know-your-customer (KYC) and anti-money laundering (AML) regulations.

Do you think the Supreme Court will overturn the RBI ban on cryptocurrencies? Let us know your views in the comment section below.

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Indian Government Not Considering Total Cryptocurrency Prohibition

India is once again in the cryptocurrency news as recent reports indicate the government has no intention of banning virtual currencies. It has always been difficult to get a definitive stance from the government concerning the emerging market. The latest news coming out of the country doesn’t make the situation any clearer.

Cryptocurrencies are Commodities

The government in India via the ministry of finance set up a committee to examine the country’s cryptocurrency market. According to an anonymous source with inside knowledge of the committee’s deliberations, there is no plan to ban cryptos in India just yet. The source also went on to say:

I don’t think anyone is thinking of banning cryptocurrencies altogether. The issue here is about regulating the trade, and we need to know where the money is coming from. Allowing it as a commodity may let us better regulate trade, and so that is being looked at

If India decides to classify cryptos as commodities, then they would be emulating countries like the United States. Apart from the significant tax implications, such a characterization would firmly identify cryptos as an emerging asset class in the country. Commenting on the possibility, Coindelta co-founder, Shubham Yadav said:

Though cryptocurrencies belong to a new class of financial assets, we can still welcome them as commodities and not currencies because of their [highly] volatile prices. Many countries have been already going in this direction, including the U.S.

Former Reserve Bank of India (RBI) deputy governor, R Gandhi, also believes that classifying cryptos as commodities vastly favorable the status quo.

If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.

Cryptocurrency Regulations Will Legitimize the Market

While the committee is less keen on banning cryptos, reports indicate that they are weighing suitable options for effectively regulating the market. One of its mandates is to prevent the use of digital currencies in perpetrating financial crimes and supporting terrorist operations. Commenting on the matter, a top government official said:

Trade is not a criminal offense. Most of us trade in various asset classes in the stock market. So how is cryptocurrency trading any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.

By looking to legitimize the market with strict regulations, the government seems at odds with the RBI. Earlier in the year, the RBI mandated Indian banks to cease all services to cryptocurrency exchange platforms in the country. The ban which came into effect on July six prohibits banks from facilitating cryptocurrency transactions in India.

Since the announcement of the ban, there has been a lot of dissent from crypto proponents in the country. However, the nation’s courts have so far dismissed all challenges to the ban which is already having some degree of impact in the Indian crypto scene.

Should the Indian government classify cryptocurrencies as commodities? What impact do you think positive regulations from India would have on the cryptocurrency market? Let us know your thoughts in the comment section below.

Image courtesy of Ethereum World News archives.

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Ripple’s (XRP) Execs Confident that Reserve Bank of India will Overturn Ban on Crypto

News reaching Ethereum World News, indicate that Ripple (XRP) Company Executives, are confident that the currently standing cryptocurrency ban by the Reserve Bank of India (RBI) will be overturned.

The Times of India reported that the company is betting on Basel Norms and the RBIs own panel report on digital currencies. The latter could provide a new framework that could result in the said overturning of the ban. This is after the RBI was found out to have not carried out ample research before issuing the order in the country.

With respect to Ripple betting on the Basel Norms to also revert the ban, these are the standardized regulations for central banks around the globe. They are refereed to as the Basel Norms for Basel, in Switzerland, is the headquarters of the Bureau of International Settlements (BIS). India’s Central Bank (RBI) has accepted the Basel Norms for banking, in its operations and practices.

Dilip Rao, who is Ripple’s Global Head of Infrastructure Innovation said that unlike Bitcoin and other cryptocurrencies, XRP is designed to enable remittances of fiat currencies and not to replace them. With RippleNet being continually accepted amongst several global central banks, Mr. Rao is quoted as saying that:

There is a great regulatory comfort with Ripple Net — particularly in the light of the Bank for International Settlements’ policy requiring central banks to have a backup for payment systems having non-similar technology.

He added that countries already have concerns that traditional cross border systems are centralized and can be turned off by the turn of a switch. The Ripple ledger, being decentralized, will still continue to function when one node is switched off. It will also provide the backup payment system required  as described by Mr. Rao in his statement above. By being on the blockchain, the Ripple ledger is totally different from traditional payment systems.

In conclusion, the initial fact that the Reserve Bank of India did not carry out their own research before issuing a ban on cryptocurrencies, proves that the decision is reversible on the basis of just this fact. Also to add, is the aforementioned Basel Norms as well as RBI’s own panel review of the decision: both of which will make the ban reversal.

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Reserve Bank of India Did NOT Research Before Banning Cryptos

A little over a month ago, Reserve Bank of India ordered the banning of cryptocurrency operations throughout the country. The surprise decision triggered an immense amount of negative reactions, especially considering that India is one of the continent’s primary markets for cryptos.

The Reserve Bank of India (RBI) also mentioned that it was creating a working group to study the feasibility of issuing a state-backed cryptocurrency.

India’s Government is Planning to ‘Take Steps’ to Make Cryptocurrencies IllegalIndia is one of the five major emerging national economies of the world

On June 12, a Twitter user under the pseudonym “Blockchain Lawyer” made public some responses issued by The Reserve Bank of India (RBI) to a Right to Information enquiry.

They show that the work done by the institution was not the most objective, which is why it is very likely that appeals by users and exchange bureaus against these decisions will be satisfactory:

The official document shows that the decisions taken lacked the minimum prior work to support them:

[Question:] Was there any committee constituted within RBI that decided and concluded abut the risks being associated while trading in virtual currencies?”

[RBI:] No

Another important aspect is that the RBI did not carry out the research work required for a measure with the potential to affect such a big number of people:

[Question:] Has RBI done its own research before reaching conclusion on its stance … on virtual currencies…?

[RBI:] No

It was also demonstrated that the RBI did not seek external advice to apply what is known as “comparative law.”

[Question:] Has RBI send out communication to other counterpart Central Banks outside India, in relation to virtual currencies to understand the regulatory framework, if any, they are building in their country to enable RBI to understand if similar regulatory frameworks can be built in India as well..?

[RBI:] No

Furthermore, the Reserve Bank of India does not have exact knowledge of the entities that would be under its regulation:

[Question:] What are the list of entities that are being regulated by RBI?

[RBI:] There is no such list being maintained

Regarding the official use of cryptos, the RBI maintains that they do not have the necessary regulatory framework for their use and legal acceptance. This is the same reason why India did not agree to trade with Venezuela using its Petro cryptocurrency:

[Question:] What are the Foreign Exchange managmente act guidelines pertaining to virtual currencies?

[RBI:] Virtual currency is not recognized as currency under Section 2(h) of Foreign Exchange Managment Act (FEMA) Hence, no guidelines have been framed on virtul currencies under FEMA

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Petition Against India’s Crypto Ban Gains 17,000 Vote As 10,000 Youth About To Lose Their Job

As countries and companies continue to clamp down on cryptocurrency and its derivatives, the Reserve Bank of India (RBI) last week joined the race, trimming the tentacles of the technology in the country, in a “Developmental and Regulatory Policies” released on April 5.

Sequel to the ban is a developmental move from crypto lovers and users in the country, which roused a petition against the embargo.

The petition tagged “Make India at the forefront of Blockchain Applications revolution” which went online since April 5 with the main purpose of imploring Indian government to back cryptocurrency has gained much recognition with over 17, 0000 votes.

The application claims that the technology provides number of youths with means of sustenance.

“There are tens of thousands of youth that have gotten jobs or employment with blockchain and relating companies”.

“This is massive for a government which has not been able to improve the employment rate”, the petition reads.

Stating that blockchain is an indispensable technology, the petition elucidated on the liable effect of the Reserve Bank of India’s (RBI) stance on the technology which tech investor Tim Draper recently labelled “a huge mistake”.

“It would lead to hard earned money of millions of Indians getting affected as they would get affected due to the knee jerk reaction in which prices got impacted”.

“Crypto and blockchain as a concept can’t be stopped. You can just decide whether you want to participate with full throttle or get left behind. The current stance from government shows they would want to remain left behind after missing the internet revolution first, AI revolution next and now blockchain revolution”, the petition added.

Reaction from individuals.

Individuals in the country supported the petition, storming social media with series of tweets.

The CEO of Zebpay, a crypto exchange in the country on April 5 tweeted that, “we will continue to do what is best for our customers and what is best for our country”.

Source: Twitter

Source: Twitter

Likewise, another crypto exchange owner, Nischal Shetty pleading to RBI tweeted that:

“US, Japan, South Korea go towards regulating Cryptos so that their country progresses while RBI decides to block Indians from getting involved in the crypto revolution. We need to think progressively, @RBI please reconsider this and let’s take a positive step forward”.

The petition claimed that the RBI’s action was not done in the interest of the citizens but for its own.