The country’s investigative agencies are still employing traditional ways to combat the use of cryptocurrencies in financing terrorism and other illicit activities, cyber experts have told The Sunday Guardian. The cryptocurrency payment system is a web based payment system which works without a Central bank or an administrator.
India’s Special Investigation Team on black money had discovered at least four cases where the payment for drugs was made in Bitcoins.
The SIT, comprising officials from Narcotics Control Bureau (NCB), Enforcement Directorate (ED), Central Bureau of Investigation (CBI) and Income Tax (I-T), thereby wants to ban the use of Bitcoins.
In a meeting held in March, the SIT officials had called the use of Bitcoins a threat to the security of the country. It had also asked the ED, NCB and IT to take adequate measures to prevent the use of cryptocurrencies. It has called for a second round of meetings to be held in Delhi next month, where the officials from all the aforementioned agencies will review the use of cryptocurrencies.
However, experts have said that cryptocurrencies should not be banned, but their use should be regulated.
“It is doubtful that the SIT will succeed in banning the use of cryptocurrencies. Ban is not a solution. We need a regulatory authority. In the US, a special task force is assigned to combat the use of cryptocurrencies in financing terrorism and other illicit uses. The task force does research on ways in which terrorism can be financed through cryptocurrencies, and subsequently proposes measures to counter such activities,” Sarvesh Tyagi, a Delhi based cyber law expert, told The Sunday Guardian.
“A blanket ban on the use of cryptocurrencies is not a very feasible solution as drug smuggling is a big problem, and in most cases, these transactions have nothing to do with use of cryptocurrencies,” Tyagi added.
This is not the first time that a ban on the use of cryptocurrencies has been suggested. Earlier this year, Finance Minister Arun Jaitley had asked for the “elimination of cryptocurrency”.
“There are no clear laws stating whether the trade in Bitcoin is illegal or authorised in the country. Right now, the general idea of the term Bitcoin in the country is vague. There are a lot of people in India who are intrigued by the technology but don’t understand it well enough,” noted cyber expert Pawan Duggal told this correspondent.
“The RBI has issued a risk advisory attached to cryptocurrency trade. But it has not prohibited Bitcoin trade. At present, there is no mechanism to regulate the use of cryptocurrencies. The officials are trying to use traditional ways to deal with its misuse without realising the actual problem,” Duggal added.
The RBI has issued three notifications pertaining to Bitcoin since 2013, in which it had cautioned users, holders and traders against the risk of using cryptocurrencies. It had also clarified that it has not given any licence to any entity or company to operate such schemes or deals.
After repeated risk advisories by the RBI in April 2017, the government had set up an inter-disciplinary committee chaired by Special Secretary (Economic Affairs) to examine the existing framework of virtual currencies. It was supposed to submit its report within three months, but till now nothing has happened in this regard.