TelecomLive April-2020

Cryptocurrency www.telecomlive.com 52 Telecom LIVE April 2020 as: (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value, but not having a legal tender status. The FATF report also defined 'Cryptocurrency' to mean a math- based, decentralised convertible virtual currency protected by cryptography by relying on public and private keys to transfer value from one person to another and signed cryptographically each time it is transferred. Again, in June 2015, FATF came up with a “Guidance for a Risk Based Approach to Virtual Currencies”, which suggested certain recommendations. In October 2015 FATF submit- ted a report on “Emerging Terror- ist Financing Risks”. The report was divided into four parts, under the captions: (i) introduction, (ii) financial management of terrorist organisations, (iii) traditional terrorist financing methods and OnDecember 24, 2013, the RBI issued a Press Release cautioning the users, holders and traders of virtual currencies about the potential financial, operational, legal and customer protection and security related risks that they are exposing themselves to. Thereafter, a report titled “Vir- tual Currencies – Key Definitions and Potential AML/CFT Risks” was issued in June 2014 by finan- cial action task force (FATF), highlighting, both legitimate uses and potential risks associated with virtual currencies. FATF is an intergovernmental organiza- tion founded in 1989 on the initia- tive of the G7 to develop policies to combat money laundering. It is a global money laundering and terrorist financingwatchdog. The FATF report defined 'Vir- tual currency' as a digital repre- sentation of value that can be traded digitally and functioning For the first time, the RBI in its Financial Stability Report of June 2013 took note of technology risks in changing business environ- ment. Paragraph 3.60 of this report noted that globally, the use of online and mobile technologies was driving the proliferation of virtual currencies. Therefore, the report stated that those develop- ments pose challenges in the form of regulatory, legal and opera- tional risks. Box 3.4 of the said report dealt specifically with vir- tual currency schemes and it started by defining virtual cur- rency as a type of unregulated digital money, issued and con- trolled by its developers and used and accepted by the members of a specific virtual community. It was also said that “the regulators are studying the impact of online payment options and virtual cur- rencies to determine potential risks associatedwith them”. Cryptocurrency history in India as “Banning of Cryptocurrency and Regulation of Official Digital Cur- rencyAct, 2019”. The draft of the Bill contained a proposal to ban themining, genera- tion, holding, selling, dealing in, issuing, transferring, disposing of or using crypto currency in the territory of India. At the same time, the Bill contemplated: (i) the cre- ation of a digital rupee as a legal tender, by the central government in consultation with RBI, and (ii) the recognition of any official for- eign digital currency, as foreign currency in India. In case the said Bill had come through, there would have been an official digital currency, for the creation and circulation of which, RBI / central government would have had amonopoly. Trading on crypto exchanges resumes With the Supreme Court setting aside the RBI's circular banning b a n k s f r o m d e a l i n g w i t h cryptocurrency, several exchanges have started opening accounts to bring back trading on exchanges like they were doing before April 2018. However, investors have been advised caution in trading till the government clears its stand on the issue. The centre had in February 2019 introduced a Bill proposing a ban on cryptocurrency. Bitcoin, the largest and the first cryptocurrency, is commanding premium of 1.5-2 pc of its cost on one of the exchange's apps which has started permitting trading against payment. Even buy-sell spread was seen very high despite new investors' registration was noticed. Unocoin, a crypto exchange from the south, has resumed offer- ing services. It has already pro- cessed hundreds of requests for deposit and withdrawal of Indian rupee and more customers are signing upnow. Another exchange, WazirX, is expected to finalise proposals of banks that have shown interest in open i ng t he i r a c coun t . The exchange was recently acquired by Binance, which is the world's larg- est crypto exchange. where sale and purchase may be permitted. The key aspects of the Crypto- token Regulation Bill, 2018, found in paragraph 13 of the 'Note- precursor to report' shows that the Inter-Ministerial Committee was fine with the idea of allowing the sale and purchase of digital crypto asset at recognized exchanges. Paragraph 13 (iii) & (vii) of the 'Note-precursor to the report' reads as follows: 13. Key aspects are summarised below: (iii) The sale and purchase of digital crypto asset shall only be permitted at recognised exchanges. (vii) The registry of all holdings and transactions on the recognised exchanges shall be maintained at recognised depositories. But, the final report of the very same Inter-Ministerial Committee, submitted in February 2019, rec- ommended imposition of a total ban on private crypto currencies through a legislation to be known