Public Interest Litigation
A PIL (Public Interest Litigation) petition has been filed before the Indian Supreme Court, seeking it to issue directions to regulate the flow of Bitcoin and ensure that it is made accountable to the exchequer. The petitioner, Dwaipayan Bhowmick, said:
“It is submitted that certain countries have made Bitcoin subject to their respective tax regimes, while a few other countries have designated it as a commodity, thereby making Bitcoin subject to government regulation and accountable to exchequer but no such mechanism exists in India till date.”
The petitioner also argued that regulatory organizations like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) were trying to shirk their responsibility with respect to regulating Bitcoin.
“It is further stated that RBI & SEBI have been trying to shift the onus on each other by asking it to be termed as “currency‟ or “commodity‟… Bare perusal of the said market price would reveal the large scale financial implications such crypto money could cause apart from anti-national activities like terror funding, money laundering, religious conversions, drug trafficking etc., etc.”
India – Ambiguous Stance
While there are multiple Bitcoin exchanges like Coinsecure, Zebpay and Unocoin operating in India, the regulators have not come out with any guidelines for Bitcoin operations. The RBI has in the past (2013 and 2017) warned investors about the risks involved in investing in cryptocurrencies. A committee was set up to look into the issues surrounding digital currency, but its report has not been made public yet. Given the lack of clear guidelines, Bitcoin investors and exchanges operate in a regulatory vacuum in India.
Courts step in when governments abdicate responsibility
As seen in the past, courts often step in to adjudicate when governments fail to offer clear guidance. While US regulators are still debating whether Bitcoin is a commodity or currency, a Miami judge had in 2016 ruled that Bitcoin is not money and does not qualify as a financial instrument. He also ruled that its sale unintentionally for illegal purposes does not constitute money laundering. In countries with common law systems (as opposed to civil law systems), judicial opinions have the weight of law and act as precedents for future cases. It is preferable that governments take the opinions of experts and provide clarity on their stance on cryptocurrencies, else regulation will be built on a piecemeal basis from judicial pronouncements.