We have heard a lot about digital currencies such as Bitcoins and Altcoins. What does the law have to say about them? Cryptocurrency is sold mainly because of the idea of no double spending and because it cannot be counterfeited. It was first created by a programmer, Wei Dai, in 1998. But it needed a proper shape and was less safe than it sounded. Later, in 2009, Satoshi Nakamoto, a developer, created a more credible system and gained recognition. It is treated as a digital asset with a digital ledger to record all the transactions. According to a 2018 survey, one of every ten Bitcoin transactions was made in India. Until 2018, there were no active rules that either regulated or unregulated cryptocurrency in India. Many scams, including the Gain Bitcoin Scam, have gained much attention. In the 2018-2019 budget, the finance minister only stated that cryptocurrency will not be considered legal tender and that the Government will take stern actions against anyone funding such illegitimate activities.
Further, the RBI issued a regulatory statement not to deal with virtual currencies and to end the relationship with organisations that use virtual currencies. In Internet and Mobile Association of India v. Reserve Bank of India [2020 SCC Online SC 275], it was argued that the RBI could not issue such notices. The Court directed the attention to the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019. But later, in 2019, the RBI issued such a notice under the Banking Regulation Act, 1948, the Reserve Bank of India, and the Payment and Settlement Systems Act, 2007. Therefore, cryptocurrencies are still unregulated in India, and despite this, entities are dealing with this because there is no complete ban.
Done By: Anoushka Samyuktha, B.A LL.B (Hons), LLM (Criminal Law), Junior Legal Consultant
For Origin Law Labs
