The legality of Bitcoins is in severe doubt in many countries of the world. Even in India the Reserve Bank of India (RBI) has clarified that the use of Bitcoins in India is legally risky. Thus, the Bitcoin exchanges operating in India must comply with Indian laws to be legal. As per the Information Technology Act, 2000 of India these Bitcoin exchanges operating in India are Internet intermediaries and they are required to comply with cyber law due diligence requirements (PDF) as well.
The matter does not end here. There are platforms that facilitate trading and exchange of Bitcoins across the world, including India. These platforms and the mechanisms through which they are facilitating such dealings are also covered by the IT Act, 2000 and other laws of various jurisdictions. Legal risks of both websites owners and the Internet intermediaries like Bitcoin facilitating platforms in now well established in India.
At Perry4Law we believe that cyber litigations against foreign websites would increase in India in the near future. This is more so when the e-commerce legal compliances in India are not followed by foreign players in true letter and spirit. Even other countries have started stressing upon cyber law due diligence requirements for business houses. For instance, cyber law due diligence for European business would be the new trend in near future.
Many foreign companies are planning to explore Indian markers in various online business fields, including e-commerce. For instance, companies like Facebook, Twitter, etc have already started exploring using their platforms for online businesses. This has raised a host of Indian legal issues that these companies are not following as on date. The Indian income tax liability of companies like Google, Facebook, Twitter, etc would also be questioned before the Indian courts in the near future.
Software and application developers are also under scrutiny of Indian income tax authorities. The forensics analysis of Nokia’s computer used to download software in India indicates the direction in which Indian regulatory regime is moving. Companies like Apple Incorporation have taken clue from this change of regulatory regime across different parts of the world.
It has been reported that Apple has removed Blockchain, an application for iPhones used to send and receive Bitcoins, from its App Store. The developer of the application has informed the media in this regard. Apple sent an e-mail to the developer and intimated that it has withdrawn the application “due to an unresolved issue”. This stand of apple seems to be correct due to legal uncertainty and risks associated with use of Bitcoins in India and other jurisdictions.