Integrating Cryptocurrencies to Legal and Financial Framework of India
DOI:
https://doi.org/10.14666/2194-7759-10-1-008Keywords:
Cryptocurrency, Bitcoin, Cyber Security, Disruptive Innovation, Money Laundering, Terror Financing, Reserve Bank of India, Securities and Exchange Board of India.Abstract
With the ever-growing popularity of cryptocurrency in India as well as globally, it is potential as an agent of various illegal activities such as money laundering and cybersecurity breaches is also gaining traction in the global, national and regional debates. Considering its emergence in India, it is pertinent to examine the issues associated with the usage of cryptocurrency and the scope it entails for the Indian economy if allowed. The government of India has so far not identified it as valid tender due to its potential usage in hiding black money and in terror financing. However, the government has not necessarily closed the door to any future regulations of cryptocurrencies. Therefore, despite operating in a grey area, the sector continues to proliferate in India and the world. This paper briefly describes the nuances and current affairs related to cryptocurrencies across the globe. It further provides a legal and regulatory perspective of cryptocurrencies in India while also discusses various cybersecurity issues related to its usage and concludes with a list of challenges associated with its incorporation in the national legal regime and tries to provide a certain recommendation that can help guide the future regulation of this disruptive innovation.
Downloads
References
Antonopoulos, A.M. (2017). Mastering Bitcoin: Programming the Open Blockchain, O’Reilly Media
Apostolaki, M., Zohar, A. & Vanbever, L. (2017). Hijacking Bitcoins: Routing Attacks on Cryptocurrencies, IEEE Symposium on Security and Privacy. http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=7958588&isnumber=7958557
Trulioo Blog (2017). Bitcoin Regulation: Cryptocurrencies, AML/KYC and Compliance (2017). https://www.trulioo.com/blog/bitcoin-regulation/
Bloomberg, J. (2017). Using Bitcoin or other Cryptocurrency to Commit Crimes: Law Enforcement is Onto You, Forbes. https://www.forbes.com/sites/jasonbloomberg/2017/12/28/using-bitcoin-or-other-cryptocurrency-to-commit-crimes-law-enforcement-is-onto-you/?sh=72730cac3bdc
Christensen, C.M., Raynor, M.E. & McDonald, R. (2015). What is Disruptive Innovation? Harvard Business Review. https://hbr.org/2015/12/what-is-disruptive-innovation
Christopher, N., Mendonca, J. & Mandavia, M. (2018). FM Dashes hopes of cryptocurrency regulation in Budget 2018, Economic Times. https://economictimes.indiatimes.com/markets/stocks/news/fm-dashes-hopes-of-cryptocurrency-regulation-in-budget-2018/articleshow/62758330.cms
Crosby, M., Pattanayak, N.P., Verma, S. & Kalyanaraman, V. (2015). BlockChain Technology: Beyond Bitcoin, Sutardja Centre for Entrepreneurship & Technology Technical Report. https://scet.berkeley.edu/reports/blockchain/
Dwaipayan Bhowmick v. Union of India, Writ Petition (Civ.) No. 1076/2017.
European Banking Authority Opinion on Virtual Currencies (2014). https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf
European Commission (2017). EU Cybersecurity Initiatives. http://ec.europa.eu/information_society/newsroom/image/document/2017-3/factsheet_cybersecurity_update_january_2017_41543.pdf
Financial CEN Regulations to Persons Administering, Exchanging or Using Virtual Currencies (2013). FIN-2013-G001. https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf
Financial Conduct Authority (2016). About the FCA. https://www.fca.org.uk/about/the-fca
Floyd, D. (2015). A $480 Million Mystery: The Saga of Mt. Gox, Nasdaq. https://www.nasdaq.com/article/a-480-million-mystery-the-saga-of-mt-gox-cm507054
Frankenfield, J. (2020). Private Key, Investopedia. https://www.investopedia.com/terms/p/private-key.asp
Gabbatt, A. & Rushe, D. (2013). Silk Road Shutdown: How can the FBI seize Bitcoins? The Guardian. https://www.theguardian.com/technology/2013/oct/02/bitcoin-silk-road-how-to-seize
Gil, P. (2017). What are Bitcoins? How do Bitcoins Work? Lifewire. https://www.lifewire.com/what-are-bitcoins-2483146
Goldman, Z.H., Maruyama, E., Rosenberg, E., Saravalle, E. & Strauss, J.S. (2017). Terrorist use of Virtual Currencies, Centre for a New American Security. https://www.cnas.org/publications/reports/terrorist-use-of-virtual-currencies?source=techstories.org
Helms, K. (2017). Venezuela Unveils Mining, Trading and Launch Details of National Cryptocurrency, Bitcoin.com. https://news.bitcoin.com/venezuela-mining-trading-launch-details-national-cryptocurrency/
Helms, K. (2018). Russia Finalises Federal Law on Cryptocurrency Regulation, Bitcoin.com. https://news.bitcoin.com/russia-finalizes-federal-law-cryptocurrency-regulation/
Internet and Mobile Association of India v Reserve Bank of India, (2020) SCC OnLine SC 275
Jankelewitz, E. (2014). Bitcoin Regulation in the UK, Coindesk. https://www.coindesk.com/bitcoin-regulation-uk/
Japan Global Banking & Financial Policy Review (2016/2017). FinTech Legislation in Japan, IFLR Yearbook. https://www.aplaw.jp/IFLR_The_Global_Banking_and_Financial_Policy_Review_2016.pdf
Kastelein, R. (2017). India’s Blockchain Community Launches Digital Asset and Blockchain Foundation, Nishith Desai & Co. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/Quotes/India_s_Blockchain_Community_Launches_Digital_Asset_and_Blockchain_Foundatio.pdf.
Kessler, G.C. (2006). An Overview of Cryptography. http://silviojemma.com/public/papers/criptography/An%20Overview%20of%20Cryptography.pdf
Kollewe, J. (2017). Bitcoin: UK and EU plan crackdown amid crime and tax evasion fears, The Guardian. https://www.theguardian.com/technology/2017/dec/04/bitcoin-uk-eu-plan-cryptocurrency-price-traders-anonymity
KPMG (2017). Digital Payments: Analysing the Cyber Landscape. https://assets.kpmg/content/dam/kpmg/in/pdf/2017/04/Digital_payments_Analysing_the_cyber_landscape.pdf
Kumar, G.R. (2017). An Analysis of Cryptocurrencies and associated concepts, The Hans India. http://www.thehansindia.com/posts/index/Hans/2017-08-06/An-analysis-of-Crypto-currencies-and-associated-concepts/317168
Lee, T.B. (2013). Bitcoin is a Disruptive Technology, Forbes. https://www.forbes.com/sites/timothylee/2013/04/09/bitcoin-is-a-disruptive-technology/?sh=44b722782956
Liao, S. (2017). Inside Russia’s Love-Hate Relationship with Bitcoin, The Verge. https://www.theverge.com/2017/10/31/16387042/russia-putin-bitcoin-regulation-ethereum-blockchain-technology
Matsuura, J.H. (2016). Digital Currency: An International Legal and Regulatory Compliance Guide, Bentham Books.
McDowall, B. (2017). The History & Current State of Financial Regulation of Cryptocurrencies Globally, Long Finance Blogs. http://www.longfinance.net/news/long-finance-blogs/1138-the-history-current-state-of-financial-regulation-of-cryptocurrencies-globally.html
Ministry of Finance (2016). Report of the Committee on Digital Payments, Government of India http://finance.du.ac.in/du-finance/uploads/pdf/Reports/watal_report271216.pdf
Mullin, G. & Lake, E. (2017). What is Wannacry Ransomeware? Malware used to cripple NHS in 2017 Cyber Attack, The Sun. https://www.thesun.co.uk/tech/3562470/wannacry-ransomware-nhs-cyber-attack-hackers-virus/
Nakamoto, S. (2009). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
Nishith Desai Associates (2015). Bitcoins- A Global Perspective: Indian Legal and Tax Considerations. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/BITCOIN-13-April-2015-A4.pdf
Noack, R. (2017). Venezuela’s economy is in free fall. The Government says a digital currency is the answer, The Washington Post. https://www.washingtonpost.com/news/worldviews/wp/2017/12/04/venezuela-says-its-in-a-financial-world-war-and-wants-to-fight-back-with-its-own-digital-currency/?utm_term=.c1d06ee2a142
Ozelli, S. (2018). Pax Crypto: Russia Proposes First Multinational Cryptocurrency, Coin Telegraph. https://cointelegraph.com/news/pax-crypto-russia-proposes-first-multinational-cryptocurrency-expert-blog
Presse, A.F. (2017). Japanese Company to start paying employees in Bitcoin, The Guardian. https://www.theguardian.com/technology/2017/dec/15/japanese-company-paying-employees-bitcoin
Reserve Bank of India (2013). RBI cautions users of Virtual Currencies against risks. https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247
Reserve Bank of India (2013). RBI cautions users of Virtual Currencies against Risks. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=30247
Reserve Bank of India (2017). RBI cautions users of Virtual Currencies. https://rbi.org.in/scripts/bs_pressreleasedisplay.aspx?prid=39435
Reserve Bank of India (2018). Prohibition on Dealing in Virtual Currencies. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243&Mode=0
Sano, H. (2017). Behind Bitcoin Boom, Japanese Retail Investors Pile in, Reuters. https://www.reuters.com/article/us-markets-bitcoin-japan/behind-bitcoin-boom-japanese-retail-investors-pile-in-idUSKBN1E70IT
Securities and Exchange Board of India (2017). SEBI Constitutes’ Committee on Financial and Regulatory Technologies. https://www.sebi.gov.in/media/press-releases/aug-2017/sebi-constitutes-committee-on-financial-and-regulatory-technologies-cfrt-_35526.html
Sharma, M. (2017). Cryptocurrencies and the Regulators Dilemma, Institute for Defence Studies & Analyses. https://idsa.in/specialfeature/cryptocurrencies-and-the-regulators-dilemma_msharma_010817
Shome, A. (2017). New US Tax Law Closes Loophole for Cryptocurrencies, Finance Magnates. https://www.financemagnates.com/cryptocurrency/news/new-us-tax-law-closes-loophole-cryptocurrencies/
The Banking Stepchild: Money Service Businesses (2016). Trulioo Blog. https://www.trulioo.com/blog/banking-stepchild-money-service-businesses/
The Hindu (2017). SC seeks govt’s response on plea to regulate Bitcoin. http://www.thehindu.com/news/national/sc-seeks-govts-response-on-plea-to-regulate-bitcoin/article20445197.ece
The Hindu Business Line (2018). Cryptocurrencies not legal, will eliminate their use. https://www.thehindubusinessline.com/economy/budget/budget-2018-finance-minister-arun-jaitley-cryptocurrencies-not-legal-will-eliminate-their-use/article22619279.ece
TRT World (2020). Turkey set to Pilot Digital Currency in 2021. https://www.trtworld.com/magazine/turkey-set-to-pilot-digital-currency-in-2021-42780
UK pushing to include Bitcoin under Money-Laundering Rules (2017). Reuters. https://www.reuters.com/article/us-markets-bitcoin-britain/uk-pushing-to-include-bitcoin-under-money-laundering-rules-idUSKBN1DY0Y2
Vishwakarma, P., Khan, Z. & Jain, T. (2018). Cryptocurrency, Security Issues and Upcoming Challenges to Legal Framework in India, International Research Journal of Engineering and Technology. https://www.academia.edu/35965075/Cryptocurrency_Security_Issues_and_Upcoming_Challenges_to_Legal_Framework_in_India
Yeong, W. (2017). Cryptocurrency Regulation: Now and the Future, Asia Law Network. http://learn.asialawnetwork.com/2017/12/18/cryptocurrency-regulation-now-and-the-future/
Zahid, M.A. (2015). Bitcoins: Mining, Transaction, Security Challenges and the Future of this Currency, Dissertation.com.
Published
How to Cite
Issue
Section
The authors when submitting their papers endorse and give permission as well to the Publisher Transition Academia Press to publish the article/paper in print and/or electronic format. Article/paper is defined as the final, definitive, and citable Version of Record, and includes the accepted manuscript in its final form, including the abstract, text, bibliography, and all accompanying tables, illustrations, data.
If/when an article is accepted for publication, Author will be asked to transfer copyright of the article to Transition Academia Press. Transition Academia Press will retain copyright of all published material and reserves the right to re-use any such material in any print and/or electronic format. Author willing to retain their copyright from the Editors might request a fair condition, on the base of a bilateral agreement.
