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If there is a business buzzword today for Indians everywhere, it is crypto-currency. Despite the clear lack of legal approval regarding the volatile arena of crypto, innumerable Indians are willing to jeopardize their hard-earned money in this, as yet, illegal tender. With that, the country is steadily approaching a tumultuous economic calamity as relevant government bodies are yet to pass an official statement regarding the crypto lobbies that are luring people with confusing ads.
A steadily rising number of crypto platforms are calling people to invest sums as innocuous as Rs 100, as is the case of a new advertisement by the Blockchain and Crypto Assets Council (BACC) and other companies such as CoinSwitch Kuber (CSK), Zebpay, CoinDCX, and WazirX. The ads are accompanied by a barely legible statement saying “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks,” at the end. Recently, crypto exchanges and platforms like the ones just mentioned have witnessed a surge of interest and they claim that millions of Indians have invested more than Rs 6 lakh crore in crypto assets already.
Veteran Supreme Court advocate and cyber law expert Dr Pavan Duggal believes that if that really is the case, with the absence of legal clarity, it is quite possible that many people could stand to lose huge sums of money to the crypto ecosystem. “It is also possible that some people may make a lot of money. The chances of an innocent user being made a victim of this impending economic disaster cannot be ruled out. The quicker India as a nation wakes up from its deep slumber and starts addressing the crypto ecosystem, the better it will be,” Dr. Duggal continues.
The Indian government is now moving to legally prohibit crypto ads; Prime Minister Narendra Modi met the crypto industry players over the weekend to express displeasure over these ads and their promises of big profits. While this may bring some respite to the common investor, these ads have played on a loop during the recent cricket matches and attracted lots of attention.
As per crypto pundits, there are still bigger crypto-threats that can cast a long shadow. Cyberlaw expert Virag Gupta points out that the zero regulatory structure around crypto has benefitted the “self-styled godmen” of the industry as they appended their own code of conduct that will affect the Indian law-making machinery adversely. “The crypto market which was illegal some years back has now risked over Rs 6 lakh crore worth of money from Indian investors. The biggest question now is: How is the government planning to levy and recover tax on money being made by crypto trading exchanges and apps? If it is treated as capital gain then the players get undue benefit and if it is treated as business income, then the whole illegal system turns legal,” the New Delhi-based expert asks.
He avers that there are certain serious aspects that need to be addressed promptly – “First, when crypto is spreading like wildfire then why is its regulation delayed. Second, without Parliament-specific approval and amendment in the RBI Act, private currency like crypto cannot be treated as a valid legal tender,” Gupta elaborates.
He wonders if the proposed law does not recognize crypto as legal tender, how will it be accepted as an asset class and how will its regulator be selected. “Crypto craze is reaching tier II and III towns and non-regulation of this market of Rs 6 lakh crore size is raising questions on the sovereign authority of the government of India. Non-levy of GST in various layers of its transaction and non-imposition of income tax with penalty is causing huge loss to the state and central government revenue,” he continues.
Due to a recent Supreme Court judgment, RBI is the nodal agency responsible for all issues pertaining to crypto assets in India. “However, we have still not seen effective steps being taken from the statutory authorities to protect consumers from vagaries of crypto-assets and cryptocurrencies and their sharp volatility,” Duggal reflects.
A crypto-currency bill is expected in the Indian Parliament’s winter session. According to crypto pundits, strong mechanisms are needed to prevent honest citizens, who do not comprehend the legal and policy ramifications of the industry, from becoming victims as has been the case in the past. “Facing a catch-22 situation, India needs stronger laws, not only for the Blockchain-based trading but also for IT and data security, in order to tame the crypto cartels,” Gupta points out in conclusion.