“The Blockchain will replace networks with markets.”  – Naval Ravikant

Blockchain Technology, the driving force of the bitcoin network, has stirred a revolution among global industries and governments. From providing secure storage, streamlined processes to a shrinking potential of cyber abuse, it has bolstered the foundations of the digital era.

About its ubiquitous usage, necessary regulations across different nations have been laid down to govern the technology. Its regulation has already seared through the countries like Singapore, Indonesia, Canada, and many more to avoid financial counterfeits and money laundering frauds. The businesses engrossed with the cryptocurrency-related assets are made to comply with the set AML (Anti Money Laundering)/CFT (Combating Financing of Terrorism) norms.

These norms preserve the integrity of bank transactions and restrain market manipulation frauds, tax evasion, drug trafficking, etc. This is managed with the assistance of ‘KYC’ (Know your customer) guidelines that help banks identify the type of financial deals and maintain confidentiality. This also ensures that banks adhere to Foreign Contribution (Regulation) Act, 2010 wherever apt and engage with the following four key factors to prevent themselves from falling prey to activities such as terrorist financing, etc.:

  1. Customer Acceptance Policy
  2. Customer Identification Procedures
  3. Monitoring of Transactions
  4. Risk Management.

On the contrary, the countries that have issued notices and banned crypto exchange platforms are China, Algeria, etc. These nations have considered these trading platforms illegal and effaced the possibility of crypto foreign exchange. Whereas countries like the USA, Brazil, etc., have proposed specific bills to help businesses, start-ups and individuals hold the currency legally and have cautioned them against its usage.

Regarding crypto in India, the market has been flourishing with over 10 million cryptocurrency investors since its advent in 2017. However, many have still befuddled its unregulated aspect with the illegal crypto. Moreover, the legal status of crypto in India is faced with varying perspectives. On onehand, the Reserve Bank of India (RBI),because of a forecasted  series of hacking, terror financing, etc imposed a ban on virtual currency exchange.

While, On the other hand, the Hon’ble Supreme Court opposed the fact with a rather crypto-favored judgment formulated on Article 19(1)(g) of the Indian Constitution. This decision allowed the affected businesses the freedom of practicing and conducting any occupation or trade.

A series of RBI Press releases since 2013 have been indicating a robust reluctant ideology against Bitcoins and how it threatens customer protection, security, and financial operations. The issues and additional cautionary releases have made it transparent that no ingrained framework exists to secure digital wallets of any entity and curb illicit activities.

In addition, the year 2017 witnessed the crumbling of two other Crypto regulation Bills in India. Still, the entities associated with RBIs were subjected to a ban on dealing with virtual currency. The supreme judicial body lifted this rule as the cryptocurrencies were not considered currency in the strict sense.

As of 2021, a new ‘Cryptocurrency and Regulation of Digital Currency Bill, 2021’ is said to facilitate a regulatory framework for a virtual currency to be set to fruition by RBI. However, it will raise a ban on all private cryptocurrencies in India except for a few underlying technological aspects and their utilization. However, the exact definition of ‘Private Cryptocurrencies’ is still unknown and can only be understood as the bill gets tabled in the parliament. As suggested by the Supreme Court, these legislation must be set based on empirical data and not just a mere possibility of risks.

In the rear, Blockchain technology has gained momentum over the world within a few years, ameliorating the major grey areas of FinTech and other sectors. It is estimated that these services will experience a disbursement of over $20 billion per year by 2024 and will attract the attention of investment capabilities. This fact alone fabricates a surge in setting up a safeguarding structure for cryptocurrency.

All in all, blockchain technology has the brimming potential to be the backbone of the global economy. It is the new utility network for moving assets and moving value.

Author – Mr. Shrey Madaan, Research Associate, CyberPeace Foundation
Reviewed by – Mr. Hrishikesh Bedi, Consultant, CyberPeace Foundation

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