TelecomLive April-2020

Cryptocurrency www.telecomlive.com 53 Telecom LIVE April 2020 Jaitley, in his budget speech said that the government did not con- sider crypto currencies as legal tender or coin and that all mea- sures to eliminate the use of these currencies in financing illegiti- mate activities or as part of the payment system, will be taken by the government. However, he also said that the government will explore the use of blockchain technology proactively for usher- ing indigital economy. In a communication dated March 13, 2018, Financial Stabil- ity Board (FSB) indicated that as per the initial assessment, crypto assets did not pose risks to global financial stability, as their com- bined global market value even at their peak, was less than 1 per cent of global GDP. But the report also noted that the initial assessment was likely to change and that crypto assets raised a host of issues around consumer and investor protection as well as their use to shield illicit activity and for money laundering and terrorist financing. On April 2, 2018, RBI sent an e- mail to the government, enclosing a note on regulating crypto assets. It was with reference to the record of discussions of the last meeting of the Inter-Ministerial Commit- tee on virtual currency. This note examined the pros and cons of b a n n i n g a n d r e g u l a t i n g cryptocurrencies and suggested that it had to be done, backed by suitable legal provisions. Immediately thereafter, on April 6, 2018 the circular barring RBI-regulated entities from "pro- viding any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual curren- cies" was issued by the RBI. It appears that at around the same time (April 2018), the Inter- Ministerial Committee submitted its initial report, (or a precursor to the report) along with a draft Bill known as Crypto Token and Crypto Asset (Banning, Control andRegulation) Bill, 2018. (ii) A very visible and clear warn- ing should be issued, through public media, advising all those who have been offering to buy or sell these currencies, or offering a platform to exchange these currencies, to stop this forthwith. (iii) Those who have bought these currencies in good faith and are holding these should be advised to offload these in any jurisdiction where it is not illegal to do so. (iv) All consumer protection and enforcement agencies should be advised to take action against all those who, despite these warnings, indulge in buying / selling or offering platform for trading of these currencies, since the pre- sumption would be that it is being donewith illegal, fraud- ulent or tax evading intent. (v) If the government agrees with the above recommendations, a committee should be consti- tuted with members from DEA, RBI, SEBI, DoR, DoLA, Consumer Affairs, and MeitY, to suggest whether any fur- ther actions, including legis- lative changes, are required tomake possession, trade and use of crypto-currencies expressly illegal and punish- able. (vi) Finally, it is clarified that none of the above recommen- dations are meant to restrict the use of blockchain technol- ogy for purposes other than that of creating or trading in crypto-currencies. On November 2, 2017, the gov- ernment constituted a committee chaired by the Secretary (Depart- ment of Economic Affairs) and comprising of Secretary, Ministry of Electronic and Information Technology, Chairman, SEBI and Deputy Governor, RBI (Inter- Ministerial Committee) to pro- pose specific actions to be taken in relation toVCs. On February 1, 2018, the then Finance minister, late Mr Arun techniques, and (iv) emerging terrorist financing threats and vulnerabilities. Coming to virtual currencies, the report said, “this technology allows for anonymous transfer of funds internationally. While the original purchase of the currency may be visible (e.g. through the banking system), all following transfers of the virtual currency are difficult to detect.” In January 2017, the Institute for Development and Research in Banking Technology (IDRBT) submitted a whitepaper on “Ap- plications of blockchain technol- ogy to banking and financial sec- tor in India”. In chapter 3, the whitepaper enlisted the advan- tages and disadvantages of digital currency. In April 2017, finance ministry constituted an Inter-Disciplinary Committee comprising of the Special Secretary (Economic Affairs) and representatives of the Departments of Economic Affairs, Financial Services, Revenue, Home Affairs, Electronics and Information Technology, RBI, NITI Aayog and State Bank of India. The task of the Committee was to: (i) take stock of the status of VCs in India and globally, (ii) examine the existing global regu- latory and legal structures, and (iii) suggest measures for dealing withVCs. The r epo r t o f t he In t e r - Disciplinary Committee was sub- mitted on July 25, 2017 and it contained certain recommenda- tionswhich are as follows: (i) Avery visible and clearwarn- ing should be issued through public media informing the general public that the gov- ernment does not consider crypto-currencies such as bitcoins as either coins or currencies. These are neither a legally valid medium of exchange nor a desirableway to store value. The govern- ment also does not consider it desirable for people to use or invest in something which has no real underlying asset value.