Indian Corporates Are Lobbying For Regulated Digital Currency In India

Indian Corporates Are Lobbying For Regulated Digital Currency In IndiaBitcoins are witnessing ups and downs in the Indian markets. As on date the Bitcoin websites have started taking legal precautions. While some have shut down their shops temporarily yet others have postponed the launch of their website altogether to avoid legal risks. The crux of this scenario is that Bitcoin websites in India must comply with Indian laws to remain legal.

The most vulnerable segment in this regard is the Bitcoins exchanges operating in India that have failed to comply with the Internet intermediaries requirements and cyber law due diligence requirements (PDF) as prescribed by the Information Technology Act, 2000 (IT Act 2000). The way Indian banking regulatory environment is changing, regulation of Bitcoins in India is the only viable option left before the regulatory authorities, including the Reserve Bank of India (RBI).

The Securities and Exchange Board of India (SEBI) has announced that it would release corporate governance rules for the listed entities in India. Further, the Parliament of India passed the Indian Companies Act, 2013 (PDF) to improve the corporate culture in India. Powers of Serious Fraud Investigation Office (SFIO) were also enhanced so that they can effectively deal with corporate frauds and crimes in India.

Recently the Reserve Bank of India (RBI) cautioned users of virtual currencies against various risks, including legal risks. The Enforcement Directorate (ED) also searched few Bitcoin websites in India as it believes that Bitcoins money can be used for hawala transactions and funding terror operations. In these circumstances the role of Indian corporates for lobbying for regulated digital currencies in India must be analysed.

According to Zee News as more Bitcoin operators shut shop in India on fears of regulatory and enforcement actions, some large corporates are believed to have begun lobbying hard with regulators and government departments in favour of “digital currency”. While none of these groups are as yet into Bitcoin business, some of them may be interested in setting up their own “virtual currency” platforms, a senior official said.

The point being advocated by such companies before the regulators and policymakers is that the world of banking and financial transactions may eventually move beyond the current brick-and-mortal model to the digital world, the official said, but refused to divulge any names.

Their representatives are believed to be putting across their views through meetings with top officials at the concerned regulatory authorities and government departments, while also suggesting a proper legal and regulatory framework for operations relating to digital currencies. The regulatory glare has intensified on Bitcoins in recent weeks due to possible money laundering, cyber security and other risks (PDF), while many operators have suspended their operations after RBI’s warning against use of such currencies.

Some of these operators have also approached RBI for clarifications and have requested it to put in place a proper regulatory framework for “genuine” virtual currencies. While Bitcoin operators are expecting clear regulatory clarifications that virtual currencies are not illegal per se, experts say such hopes are futile given that these currencies are saddled with number of significant risks at the moment. There have been regular reports of cyber criminals hacking and stealing virtual currencies across the world.

More and more legal violations are being reported these days. In the past there have been many media reports of the usage of Bitcoins for illicit and illegal activities in several jurisdictions. Now it has been reported that some Indian tea traders violated Indian laws by engaging in illegal Bitcoin transactions. It is high time for Indian regulatory authorities to regulate use and dealings in digital currency in India.

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