The Indian regulators may be planning to propose a new bill to the government which recommends a blanket ban on cryptocurrencies. Indian mainstream media outlet Economic Times reported that the government has already kicked off inter-ministerial consultations on a draft bill to ban cryptocurrencies.

Called the ‘Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019’, the draft bill has been circulated among the key government departments which include the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA).

According to the report, the four government departments are in favour of a blanket ban on sale, purchase and issuance of cryptocurrencies. Based on the feedback from these departments, the bill will be proposed to the new government after the elections.

The committee has also pointed out the risks associated with money laundering and proposed that the ban can be achieved under the Prevention of Money Laundering Act. In addition, the regulators have also pointed out at the multitude of scams that are being run in the space fleecing gullible investors with promises of huge returns.

The Hindu Business Line mentions that it was the IEPFA that wrote to the Department of Financial Services under the Ministry of Finance recommending a ban on cryptocurrencies.

Mainstream Media FUD again?

Mainstream media FUD is nothing new. Even in the past, the Economic Times and several other media outlets have written about cryptocurrencies but none of their reports have ever come true. If we look at the Economic Times report closely, there are a few inconsistencies:

• The report talks about ‘Regulation of Official Digital Currencies’. This presumably refers to a state-backed cryptocurrency. When the Indian regulators have not shown enough understanding of cryptocurrencies, can we really expect them to launch a cryptocurrency? And if they do not like the idea of cryptocurrencies, why launch an official one in the first place
• The report points to money laundering and dubious ponzi schemes as one of the key reasons to advocate the ban. Doesn’t the Indian government realise that it is the lack of cryptocurrency regulations that is exposing the industry to such problems? If the government allowed cryptocurrency exchanges following KYC and AML procedures to run their operations smoothly, would such problems even arise? If the government implements a blanket ban, a parallel economy will be created making it more difficult for the government to track cryptocurrencies.
• The report says “…sale purchase and issuance of cryptocurrencies such as Bitcoin, Ethereum & CashCoin etc.” The report has clubbed Bitcoin and Ethereum with an unknown coin named CashCoin. This clearly indicates the level of understanding the mainstream media has about cryptocurrencies.
• And finally, the report relies on ‘sources’. Can we really believe in unknown sources yet again?

India’s Progress on Cryptocurrency Regulation

A recent article on Bitcoin.com revealed that the Ministry of Finance recently published a summary report where various departments were consulted with regards to all aspects of cryptocurrencies. The report says that various options for treating cryptocurrencies are being examined by the committee.

It is possible that the Economic Times article is once again a classic case of media FUD. All eyes are now on July 23rd when the next hearing of the RBI vs cryptocurrency matter takes place in the Supreme Court.

India Considering Blanket Ban on Cryptocurrencies? was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.

India is among the few countries in the world that has seemingly no idea what to do with cryptocurrencies. While some countries like China have completely banned cryptocurrencies, many others like Japan, Thailand and Malta are becoming the launchpad for new blockchain and cryptocurrency startups. The Indian government, due to part ignorance and part lack of prioritization, has never given this nascent asset class the attention that it deserves. This existing regulatory gap is leading to cryptocurrency scams, brain drain and the risk of getting left behind in a revolution where other countries are miles ahead.

Now, one of the big problems for regulating cryptocurrencies is that it cuts across jurisdictional boundaries. According to the existing regulatory framework, both the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have some authority over cryptocurrency regulations in the country. However, RBI’s knee-jerk banking ban on cryptocurrency-based businesses in the country has led to it hijacking the narrative and becoming the de-facto cryptocurrency regulator in the country.

India’s Regulatory Approach Towards Cryptocurrencies: Riddled with Inconsistencies

In one single swoop, RBI squeezed the cryptocurrency ecosystem in the country by banning banks and other financial institutions from providing service to cryptocurrency businesses. As we near the one-year period of India’s Black Day for cryptocurrencies (April 5th) when RBI issued its draconian directive, it is very clear that RBI’s approach has defied logic on all counts.

For starters, an RTI application from lawyer Varun Sethi revealed that RBI did not do enough research before implanting the banking ban. Neither did it consult industry stakeholders and other central banks nor did it set up its own team to understand the industry before arriving at this decision.

Furthermore, in a question posed to The Minister of State in the Ministry of Finance, Pon. Radhakrishnan in a Lok Sabha session, it was revealed that the government did not keep a track of cryptocurrency trading in the country. If that was the case, how did they know about the risks being posed by money laundering? And why were income tax notices sent out to Bitcoin traders last year? This unclear stance of the Indian regulators is baffling at best!

The Indian government has set up a committee led by Subhash Chandra Garg to recommend a cryptocurrency regulatory framework. Despite the availability of good regulatory templates from countries like Singapore and Thailand, our government committee has still not been able to come up with a definitive framework for crypto assets.

Last month, the Supreme Court gave the Indian government one month to come up with cryptocurrency regulations. The apex court is also going to decide on the constitutional validity of the RBI banking ban. As the Indian crypto community awaits the Indian government’s decision on the matter, we think it would be a good idea to hand over the regulatory reigns of cryptocurrency trading in India to SEBI instead of RBI which has simply not showcased the aptitude and willingness to govern the asset class.

Five Reasons the Indian cryptocurrency Industry should be Governed by SEBI

If you look at crypto regulations worldwide, the securities regulators across all countries have a huge say in the industry. The Securities and Exchange Commission (SEC) in the US has been actively discussing the status of crypto assets as securities, declaring that Bitcoin (and presumably Ethereum) is not a security while going after exchanges that it deemed were selling tokens in violation of securities laws.

The Thailand SEC also provides a good example. They recently approved the first ICO portal that will allow them to screen and approve legitimate token sales. In addition, the securities regulator is also preparing for the upcoming trend of Securities Token Offerings (STOs).

So, when world over, the securities regulators are the de-facto regulators for cryptocurrencies, why has SEBI not stepped up to assume this role in India? We offer five reasons for SEBI to govern the cryptocurrency industry in the country:

RBI is a Central Bank, Not a Crypto Regulator — Globally, the central banks do not have a significant say in regulating the cryptocurrency sector in the country. When was the last time you heard the Federal Reserve talk about cryptocurrencies? We need to correct this and let SEBI take over the crypto narrative in the country in the absence of a specialised cryptocurrency regulator.

India Lacks an Integrated Financial Regulator — Countries like Japan and Singapore have organisations such as the Financial Services Agency and the Monetary Authority of Singapore which are integrated financial regulators in-charge of all key financial sectors. Since India has fragmented institutions for its different sectors, it makes sense to hand over cryptocurrencies to SEBI — which already looks after the stock exchanges, financial products, investor protection mechanisms and other similar functions which are expected of cryptocurrency regulators.

If Cryptocurrencies are Treated as Commodities — There is one school of thought in the Indian government that thinks cryptocurrencies should be treated as commodities. If the government indeed goes this way, then SEBI will become the default regulator since it regulates commodities in India.

The Arrival of Security Tokens and Tokenised Securities — STOs (newly issued tokens that represent securities) and tokenised securities (tokenisation of existing real-world assets) are expected to truly transform the world. If these live up to their promise, we will need a regulator which can understand the nitty-gritty of securities. Solution: SEBI.

SEBI has shown a willingness to understand cryptocurrencies — No government body, with the sole exception of SEBI, has really shown a willingness to understand cryptocurrencies. Last year, SEBI sent its officials on ‘study tours’ to Japan, UK and Switzerland to understand the crypto regulatory approach taken by these countries. These officials engaged with global financial agencies and gained a deeper understanding about regulating cryptocurrencies and ICOs. No other government agency has shown this kind of a proactive approach towards cryptocurrencies.

Until we can create a suitable government department to look after digital currencies, SEBI is best positioned to look after the cryptocurrency industry in the existing regulatory framework.

India is losing out in the blockchain and cryptocurrency revolution to other countries, despite having the best of blockchain talent in the country. We urge the Indian government to lift its arbitrary banking ban and give SEBI the authority to regulate crypto assets!

Five Reasons the Indian Government should Hand Over Regulation of Crypto Assets to SEBI was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.

Cryptocurrency continues to dominate headlines in India for all the wrong reasons. As RBI tries to choke up cryptocurrency trading by stopping banks form dealing with exchanges, another big blow has come, allegedly, from the auspices of the government itself. India’s leading opposition party, the Indian National Congress (INC) has accused the ruling Bharatiya Janata Party (BJP) of perpetrating a Bitcoin scam which might reportedly be anywhere between Rs 5,000 crore to Rs 88,000 crore!

According to the Hindustan Times report, Congress has demanded a Supreme Court-monitored judicial probe into the alleged conversion of black money into Bitcoin. They have also alleged that the state’s top leadership has been converting black money through hawala transactions.

Earlier, there were reports that an ex-BJP legislator Nalin Kotadiya was allegedly involved in the kidnapping of a Surat-based builder and extortion of Bitcoin worth Rs 9 crores. A Sessions Court in Ahmedabad had also declared him a proclaimed offender in connection with the Bitcoin extortion case.

The BJP, on its part, has strongly refuted the claims made by the Congress and has accused the opposition party for spreading lies and confusion. The Gujarat State Police has formed a special investigation team to investigate the crime. It remains to be seen what details emerge out of the current investigation.

Earlier this year, another mega scam had been unearthed when Amit Bhardwaj was arrested in connection with the Rs 2,000 crore Bitcoin scam.

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After months of taking a negative stand against cryptocurrencies and shadow banning it by throttling banks through a RBI circular last month, a new CCN report has revealed that India may be planning to levy 18% Goods and Services Tax (GST) on cryptocurrency trading from July 2018. According to the report, cryptocurrencies will be treated as intangible goods like software systems. The proposal is currently being evaluated by the Central Board of Indirect Taxes and Customs and will be presented to the GST council before finalizing the terms.

Key points of India’s cryptocurrency tax proposal:

• Buying and selling cryptocurrencies — Buying and selling cryptocurrencies will be akin to supplying of goods, and those facilitating these transactions through supply, storage and accounting will be counted under services
• Valuation — The value of cryptocurrency will be determined through the value of the digital asset in rupees or other fiat currencies
• For transactions in India — If the buyers and sellers are based in India, any transaction would be treated as a supply of software while the buyer’s location will be treated as the place of supply
• Cryptocurrency mining — Cryptocurrency mining will be taxable and will be treated as a supply of service. Miners who earn more than Rs 20 lakhs will have to register as a business entity with the GST council.
• For transfer and sale activities— The registered person’s address/location will be treated as the place of supply. For non-registered persons, location of the supplier would be the place of supply
• For transactions outside India — Integrated GST would be applicable for cross-border transactions, and these transactions would be treated as import and export of goods. IGST will also be charged on cross-border supplies.

What’s the future of cryptocurrency in India?

India has had a love-hate relationship with cryptocurrencies. While lauding the power of blockchain tech, the Indian government had been constantly warning people against investing in cryptocurrencies for the past couple of years. Indian investors, though seemed to love cryptocurrencies and lap them up, so much so that every 10th Bitcoin transaction in the world was happening from India. However, RBI put this party to an abrupt halt with their April 6th circular which banned banks from offering services to cryptocurrency-based businesses and asked them to cease banking services to such entities.

Despite contrary perception though, cryptocurrencies itself were never illegal. Economic Affairs secretary Subhash Chandra Garg had even confirmed that there was no ban on trading of crypto assets, after the RBI ban. There was also a CNBC Awaaz report which said that the Indian government is working on a cryptocurrency bill to regulate virtual currencies.

This new development, however, has made the cryptocurrency environment more ambiguous. India seems to be using existing regulation to classify cryptocurrencies, when the need of the hour is to make crypto-specific regulations similar to countries like Singapore and Japan. But instead of cribbing about it, I would treat this is as a positive first step, and hope that the proposals will evolve as the Indian government gains a better understanding of cryptocurrencies.

If this current proposal is indeed passed, it will also pave the way for an interesting period for cryptocurrency evolution in India. As per my understanding, a regulatory framework does give the green signal to cryptocurrency-based businesses to operate freely in India. In such a scenario, can banks refuse to offer services to legitimate cryptocurrency businesses? Was RBI’s April 6 circular just a temporary ban on banking transactions? Will RBI reverse its decision once this proposal is passed? Or will the RBI ban continue and peer-to-peer cryptocurrency transactions will become the norm?

Lots of questions. We will wait for the answers.

Please do subscribe to my YouTube Channel CryptoDost where I analyse the world of cryptocurrencies from an Indian perspective.

The TRON and EOS mainnet migration has indeed enthused the community following both the cryptocurrency projects. With this migration, both the tokens will cease to exist on the Ethereum blockchain and will become a coin on their own blockchain. The TRON mainnet launches on May 31st, whereas the EOS mainnet launches on June 2nd.

The TRON Foundation had made an announcement where it has asked its token holders to move their TRX tokens from their private wallets to cryptocurrency exchanges which are supporting the mainnet migration. This will help avoid complications in depositing, withdrawing and trading of TRX tokens. The TRX migration from ERC20 to its mainnet will occur between June 21 to June 25. Users will have to move their tokens to an exchange supporting the migration on or before June 24th.

EOS token holders have two options. If you are holding EOS in your own wallet, you will have to register your address before the launch. EOS Foundation will create a snapshot of token balances that carry over to the new EOS blockchain. You risk losing tokens if you do not register your addresses before the launch date. More details can be found on this Reddit thread. The easier option, however, is to simply transfer your tokens to an exchange which is supporting the EOS mainnet migration.

Which Indian cryptocurrency exchanges have announced support for EOS and TRX mainnet migration?

Many leading Indian cryptocurrency exchanges have already announced their intention to support the EOS and TRON mainnet migration. The following Indian exchanges have announced support for the upcoming EOS and/or TRX mainnet migration:

Zebpay — https://www.zebpay.com/blog/support-for-eos-and-tron-mainnet-token-swap/

WazirX — https://medium.com/wazirx/eos-tron-mainnet-token-swap-565521ae22d4

Coindelta — https://twitter.com/coindelta_/status/992766627987865600

CoinDCX — 
https://twitter.com/coindcx/status/996012149959884801 (Supporting TRON mainnet migration)
https://medium.com/coindcx/coindcx-will-support-eos-mainnet-token-swap-d054f2983874 (Supporting EOS mainnet migration)

Bitbns — https://medium.com/bitbns/how-to-do-eos-tron-token-swap-on-bitbns-ac07121e1148

Koinex — https://medium.com/koinex-crunch/announcement-on-eos-and-tron-token-migration-29c33a76bf68

We will keep updating this table as more exchanges announce support for the TRON and EOS mainnet launch.

Please do subscribe to my YouTube Channel CryptoDost where I analyse the world of cryptocurrencies from an Indian perspective.

It looks like the fight against India’s central bank — Reserve Bank of India (RBI) — has gone to the next level. The Reserve Bank of India had passed a circular on April 6th banning banks from offering services to cryptocurrency exchanges. Now, a CoinCrunch article, has revealed that four big Indian cryptocurrency exchanges — Koinex, Coindelta, CoinDCX and Throughbit — have jointly filed a writ petition challenging the constitutional validity of the RBI circular.

Notably, two Indian companies, Kali Digital Ecosystems and more recently Flinstone Technologies have already filed an appeal in the Delhi High Court against the RBI ban. Following Kali Digital’s petition, the court had also issued a notice to the RBI, the Union of India and the GST council and asked for their responses by May 24.

Another leading Indian cryptocurrency exchange, Bitbns,had also started a Change.org petition which has gathered 44,300+ signatures. An Indian lawyer, Varun Sethi, who goes by the handle Blockchain Lawyer on Twitter had also initiated a signature campaign to garner support to file a Public Interest Litigation (PIL) against RBI’s circular. Hashtags like #ISuppportCrypto and #RBICantStopMe were used by the community to indicate their stance against the RBI move.

Update: I also published a video on my channel. Do check it out:

It is good to see big Indian cryptocurrency exchanges taking a joint action against the RBI move. In the videos on my YouTube channel, I have always urged the entire Indian cryptocurrency investor community to come together and fight to save blockchain and cryptocurrency innovation in India. According to the report, the writ petition is likely to be listed for hearing before the court on May 11, 2018. We do hope that RBI’s draconian move is reversed soon.

Please do subscribe to my YouTube Channel CryptoDost where I analyse the world of cryptocurrencies from an Indian perspective.

One of the dominant stories on my Twitter feed late yesterday night was the arrest of Amit Bhardwaj, the man behind one of the biggest cryptocurrency scams to have emerged out of India. The scale of his operations were truly mind boggling — Bhardwaj managed to siphon off close to $300 million (Rs 2000 crore approximately). After being holed up in Dubai for the longest time, Amit Bhardwaj was finally arrested in Bangkok yesterday.

Who is Amit Bhardwaj?

Believe it or not, Amit Bhardwaj’s LinkedIn profile says he is an Infosys alumnus, with a background in software development. He was active in the cryptocurrency space for five years and had launched many cryptocurrency related ventures — GainBitcoin, GBMiners, AmazeMiners, MCAP coin, CoinBank and HighKart.com. He has even authored a couple of books around cryptocurrencies.

What was the GainBitcoin scam?

GainBitcoin was a classic ponzi scheme which promised investors assured interest of 10% on their Bitcoin holdings per month for 18 months. (Did I hear someone singing Bitcooonnnneeeeeeccccccttttttt?)The scam followed a typical multi-level marketing scheme which promised good commissions to people who enrol others for the program.

This Quora thread is full of reports from customers who have been duped by the Gainbitcoin scam. According to these revelations, when people started asking Gainbitcoin for their BTCs, they were asked to take their payouts in MCAP which was again a cryptocurrency floated by Amit Bhardwaj.

What is MCAP?

Called the ‘Bitcoin Growth Fund’, MCAP looks like a front which was used to re-route investor money from GainBitcoin. In fact, MCAP is even listed on a big exchange like HitBTC. Its current price is $0.07 and not surprisingly, its price has fallen by 64% after this news. At the time of writing, it still has a market cap of $738,824 (110 BTC) with a rank of 783 on Coinmarketcap which tells you the scale of the scam.

What is GBMiners?

According to a detailed Factor Daily report, GBMiners stands for GainBitcoin Miners, which at one point accounted for 3.8% of the BTC hashing power. However, a lot of speculation and mystery surrounds the origin and workings of GBMiners. The report goes on to say that the investments made in GainBitcoin were powering the mining operations of GBMining.

In fact, people had called out these Ponzi schemes long time ago. Coin Journal’s Kyle Torpey had reported about this back in 2017. The Quora thread mentioned above also dates back to March 2017. A Change.org petition was also floated early last year against Amit Bhardwaj.

What can Indian cryptocurrency investors learn from this?

1. Bitcoin and altcoins are still not regulated in India, and entities cannot offer investing and advisory services around them. Do not engage with such businesses.
2. Never fall for schemes which offer assured returns. No market-linked instrument can ever promise guaranteed returns, be it stocks, equity mutual funds or cryptocurrencies.
3. Never entrust any body else to hold your Bitcoins for you. Bitcoin enables you to be your own bank and you should be solely in charge of your Bitcoins. Don’t keep your cryptocurrencies with anyone else. If they run away with your hard-earned money, you have no recourse. In fact, don’t even keep it on legitimate cryptocurrency exchanges. Invest in a good hardware wallet like Ledger Nano S and store your cryptos safely.
4. Bitcoins and other cryptocurrencies are not legal tender in India. So, kindly do not do any business-related transactions with cryptocurrencies. You will be on the wrong side of the law.
5. Before investing any cryptocurrencies, do a thorough research about the project. Look at legitimate YouTube channels, reports from sources like CoinTelegraph and other genuine resources before arriving at an investment decision. If you go wrong with your investment, you have only yourself to blame.
6. Understand that when you dabble with cryptocurrencies, you are playing with fire. Cryptocurrencies do have the potential to give you great returns, but they are affected by many economic, regulatory and technical factors beyond our control. Invest only the amount that you can afford to lose. Do not over leverage to invest in cryptocurrencies.

Unfortunately, stories like these bring negative media attention to cryptocurrencies, and stop people from learning about this revolutionary technology. Just like other ponzi chit fund schemes in the past, bad actors exist in the world of cryptocurrencies as well. The onus is on us, the investors, to be careful about not falling prey to such schemes. As long as investors continue to be unrealistic with their expectations, schemes like these will continue to flourish!

If you like the story, please do clap for it :) If you hate clapping, please do the next best thing and subscribe to my YouTube channel called Crypto Dost where I help investors understand cryptocurrencies from an Indian perspective.

Disclaimer: This is not financial, legal or investment advice. My blogs and videos are solely meant for information purposes. Consult your own financial advisor and do your own research before investing in cryptocurrencies.

I recently read the story of What3Words, a London-based startup, which has taken over the onerous task of giving a unique address to everyone in the world. You maybe surprised to know this, but as we rip open our newly arrived packages from Amazon, there are billions of people in the world who live in poorly marked addresses, or in worst cases, no address at all. To solve this, Chris Sheldrick, the founder, has divided planet earth into a grid of 3x3 metre tiny squares and assigned each of these squares a unique three-word string name based on its coordinates. So, while length.grab.torch is the address of the front door of the White House, guess.mineral.soils is the address of Dubai’s famous landmark Palm Jumeirah.

Now, What3Words is a classic example of a new-age digital business that aims to fundamentally alter the behaviour of the users. So, forget zip codes, locality, street names and latitude/longitude. Here’s a business which aims to disrupt a process that has been in place for countless number of years. So, is fundamental behaviour change the reason behind the success of digital platforms? Let’s try to understand this phenomenon with a few examples.

One of the biggest success stories of recent times is Pokémon GO. What do you think is the reason for its massive success? The game offered a never-seen-before (read behaviour changing) experience to its users. The unique combination of augmented reality combined with a uniquely fresh physical gaming experience is what made it a winner. I argue that more than the Pokémon franchise, it was the push towards behaviour change which brought the game unprecedented success. Such a nicely packaged game would have been equally successful with any other comic franchise (Pokémon lovers would so hate me now!).

Now, put yourself in the shoes of a traveller who has just entered a foreign land. As soon as you land, you walk into a local’s house and start living with him/her. Creepy right? Well, that’s exactly what Airbnb has done with so much success. In fact, it has totally transformed the whole travel experience for users as they get a chance to explore a culture like never before.

If you try and think about most of the successful digital businesses today, you will find that behavior change is the essence of these platforms. Either by design or by default, these platforms have challenged the norms and uprooted many of the existing structures and processes. Think what Uber has done for taxis, Coursera has done for education and Amazon has done for commerce and you will get the drift.

I think there is a lesson to be learnt for all the entrepreneurs and businesses here. Anyone developing a new product or ideating about their next digital venture, should think about a product/service which can give users a new way to think, engage and challenge themselves. Humans are evolving animals and we love it when we are shown a new way of doing things. A successful company will factor in this evolution as it charts its future path. Google is one company which has done that pretty well. I am not trying to say that every game changing, crazy idea will be loved by the customers. There will be failures as well. But the best success stories will be those which create a dent in the world. And that dent is created when you challenge and alter existing conventions!