Bitcoin dealers and traders in India have taken
Indian laws for granted for too long. Initially they presumed that
there is no law that prohibits the unregulated dealing in Bitcoins in
India. However, the moment Reserve Bank of India (RBI) declared
that use of Bitcoins in India is subject to Indian laws and is
legally
risky, most of the Bitcoin websites closed their shops.
RBI has just reiterated
what has been suggested by Perry4Law,
the leading techno legal law firm of Asia. According to Perry4Law,
Bitcoins
website owners and entrepreneurs must comply with Indian laws to stay
legal. Even RBI has clearly mentioned that there have been
several media
reports of the usage of VCs, including Bitcoins, for
illicit
and illegal activities in several jurisdictions.
Soon after the cautious advisory, the enforcement
directorate (ED) swung into action and raided two
Bitcoins websites and their offices. ED believes that
Bitcoins
money can be used for hawala transactions and funding terror
operations and this seems to be a legally plausible
explanation as well.
Now it has been reported by Hindu
that a small section of tea traders and exporters have bee using
Bitcoins to bypass Indian laws and to deprive Indian exchequer of the
revenue it is legally entitled. The price this kind of shipment
fetches is fantastic, around $11 per 15 gm of tea. Any consignment of
up to 4 kg, if sent out of India by an international courier, will
attract no mandatory surveillance or monitoring.
The attention of the Commerce Ministry and Tea Board
has also been drawn to this section of small and specialised tea
growers and exporters who have been opting for US-based online
trading platforms to use digital currency Bitcoin as a means of
expanding their international business. This way they are bypassing
the normal banking channels and they cannot be regulated and
scrutinised by Indian authorities.
The Bitcoin instrument helps the exporter and the
importer of tea clinch a deal directly without any middleman, thus
cutting out the middleman’s fees. The transaction can be completed
within a few minutes and weekly holidays, bank holidays or strikes do
not stand in the way of concluding the deal. Also, payments can be
received from anywhere in the world without any bank transfer or the
use of debit or credit cards.
In the winter session, several Members of Parliament
raised questions about the use of the Bitcoin instrument by a section
of small and specialised tea growers to sell their produce abroad.
They wanted to know if the Government was aware of such practices,
and if so, was it contemplating any action.
However, the stand of Indian government in this
regard is still not clear. This has not only given rise to legal
uncertainty but has also encouraged illegal and
unauthorised use of Bitcoins in India. The Information Technology Act
2000, which is the cyber law of India, prescribes cyber
law due diligence and the Internet
intermediary liability in India. These cyber laws due
diligence and Internet Intermediary requirements squarely apply to
websites dealing, selling and transferring Bitcoins in India.
Further, money laundering, foreign exchange and security dealing laws
also apply to Bitcoins dealings and trading in India.
The cyber
law trends of India 2013 by ICT law firm Perry4Law has
cautioned
(PDF) that Bitcoins websites may further face legal actions if they
fail to comply with Indian laws in the year 2014. Taking preventive
measures by the Bitcoin community of India would be a sane choice as
the present regulatory requirements of India are not followed by the
Indian Bitcoin community. Let us hope that the Bitcoins
saga in India would not end up in the prosecution of
Bitcoins entrepreneurs in India.
