When asked about challenges, participants consider theft, hacking (58.3%) and no central authority (53.3%) as the biggest challenges to cryptocurrencies. Also, technical problems (31.7%), volatility of exchange rates (38.3%) and anonymity (30%) were also considered as challenges by significant percentage of participants.

How likely are you to invest in cryptocurrency in future?

60 responses

When asked about their likelihood of investing in cryptocurrencies, 76.7% of the participants showed their will to invest in them. On the contrary, 21.7% of the participants are in the category “not so likely to invest”.

In the next 10 years do you expect use of cryptocurrencies will:

60 responses

When asked about the future of cryptocurrencies, 46.7% of the participants believe that it will grow in use and 20% of them believe it will grow substantially. Only 15% of them believe that it will decline in use and 6.7% of them believe that cryptocurrencies have no future and will vanish completely.

From the survey it is evident that India needs a proper and effective legislation pertaining to cryptocurrencies. The unregulated status of cryptocurrencies in India has not stopped public from dealing in them. Unawareness and lack of knowledge pertaining to cryptocurrency is also a major issue which needs immediate attention. According to the survey report, even the majority of people believe that the cryptocurrencies should be legalized and regulated in India.

LEGAL ISSUES OF CRYPTOCURRENCIES:

1. Genus of cryptocurrencies: Currency or a Commodity:

Money, should serve three distinct functions:⁷

· It should be generally accepted as a medium of exchange.

A good medium of exchange should facilitate the exchange of goods as best as possible. Therefore the costs of preserving the currency has to be low, meaning that when the money changes hands it should not deteriorate (paper bills for example are not well qualified on this point, as when they are being used their physical quality deteriorates). It has to be easy to transport the currency in order to pay for goods wherever it is needed, meaning that the good should have a high market value in relation to its volume and weight. It has to be divisible in order to exchange the exact amount of value for the good. Cryptocurrencies score high on the function medium of exchange. They exist in a purely digital form; therefore they are by definition non‐perishable. Cryptocurrencies are highly divisible and fungible. There are no transport costs as opposed to gold and cash, since transactions happen on the internet. Finally are they unable to be counterfeited due to the technical architecture and use of cryptography.

· It should be a unit of account so that we can compare the costs of goods and services over time and between merchants. This means that money is the yardstick against which prices are measured.

The value of cryptocurrencies is highly volatile at the moment making it unsuitable as a unit of account at the moment.

· It should be a store of value that stays stable over time. Money has to be able to be stored and spent on a later period in time, while retaining its value. For it to retain its value it is important that the value does not fluctuate heavily. Cryptocurrencies score medium on this topic because of price fluctuations. These price fluctuations make that it does not really count as a good store of value. However cryptocurrencies can be stored very well and do not perish due to their digital nature⁸.

Thus, from the point of view of economics, a thing capable of fulfilling all these three functions would be regarded as money, no matter what its legal nature. However, cryptocurrencies like Bitcoins faces a structural economic problem. Only 21 million units of Bitcoins can be issued, with no expansion possible after the year 2140. If such cryptocurrencies becomes successful and displaces sovereign fiat currencies, it would exert a deflationary force on the economy since the money supply would not increase in concert with economic growth⁹.

Bitcoin shares many similarities with gold. First of all, neither is overseen by a single government. Second, Bitcoin’s supply will cease in 2140¹⁰, i.e. they both have limited supply, whereas currencies can always be printed by their respective governments. Finally, with respect to the concerns over fluctuation, the price of gold fluctuates much more than the price of currencies, as demand against the finite supply fluctuates, just like cryptocurrencies. From a legal perspective, cryptocurrencies fulfils the requisites of definition of a commodity according to U.S. law¹¹. Also, cryptocurrencies are tangible, even if they are not physical coins nor in the actual possession of the investors. In sum, the classification of Bitcoin remains a contentious subject. In light of the foregoing, there could be as many classifications as there are uses of Bitcoin. Government regulators should provide guidelines on exactly how each regulatory framework will apply and co-exist without hindering the promising growth potential of this innovative financial platform.

Impact of Cryptocurrency on Tax Regime:

Another area that has attracted the attention of regulators is the financial aspects of cryptocurrencies. Legal characterization of cryptocurrencies is the key in determining its tax consequences. The main distinction is whether cryptocurrency is a commodity (capital asset such as stock), in which case capital gains rules apply or a currency. Cryptocurrency transactions are subject to tax like any other asset or currency. Cryptocurrency transaction may attract capital gain tax, income tax, transaction tax, and wealth tax. Even if cryptocurrency transaction is void and illegal, the tax law is empowered to charge taxes on such transactions. In March 2014, the Internal Revenue Service in the United States ruled that Bitcoin will be treated as property for tax purposes as opposed to currency despite knowing that Bitcoin functions as a medium of exchange, a unit of account, and store of value and operates like real currency in some environments. This means Bitcoin will be subject to capital gains tax¹².

Talking on a global level, on the one hand, some countries focused on which category Bitcoin should fall under. For instance, Canada came to the conclusion that, in the absence of a legal tender characteristic, Bitcoin fails the currency test and should, therefore, be considered as a commodity for tax purposes. More specifically, the Canadian Revenue Agency confirmed in January 2014 that when one uses Bitcoin to purchase goods or services, the “transactions involving bitcoins should be reported as would any other barter transaction.”¹³

Lastly, Germany and the U.K. have decided to adapt their tax system based on what would be economically viable. Indeed, despite the fact that Bitcoin is not a currency because it is denationalized, Germany chose to recognize Bitcoin as an equivalent to private money, and, therefore, gave it the tax regulation of a currency¹⁴.

Thus, cryptocurrencies may be considered as a medium of exchange, a negotiable instrument, a property or a subject of the contract. Thus may depend upon the nature of transaction and the power of legislation to tax such transaction. Some of the taxes that may attract cryptocurrencies are property tax, inheritance tax, transaction tax, service tax, value-added tax (VAT), gift tax, wealth tax, capital gain tax, income tax and many more¹⁵.

2. Consumer Protection:

The cryptocurrency transactions are based on trust on peers, promoters and the system. Bitcoin transactions are risky due to the absence of basic consumer protection, such as the provision of refunds arising from disputes between merchants and customers. In case of any breach, the victim may not be able to produce acceptable legal evidences for recovery of the damages. Most of the headlines related to cryptocurrencies focus on the shortcomings of the system. The cryptocurrency uses principles of information technology (IT) and hence most of the possible disputes involve IT related offences such as hacking, digital licenses etc. Apart from this, other legislations that may be relevant are consumer protection law, contract law, laws related to money laundering, intellectual property law and banking laws. Various estimates show cryptocurrency crime is on the rise, keeping pace with the market’s rapid growth. That forces investigators to focus on high-profile cases, security professionals and officials say, effectively leaving small investors to their own devices. People are encouraged to report cryptocurrency theft to local police like any other crime, saying failing to do so only emboldens criminals. Yet because many victims simply do not see the point, cryptocurrency theft is far more common than any published estimates suggest, according to the security professionals. According to financial research firm Autonomous NEXT and Crypto Aware, which works with investors affected by crypto scams, about 15 percent of cryptocurrencies have been stolen between 2012 and the first half of 2018, representing a cumulative $1.7 billion in value at the time of the theft and with a rising tendency. In the first half of this year alone, more than $800 million has already been stolen, according to the data. Yet Lex Sokolin, a partner and global director of fintech strategy at the firm, estimates that as much as 85% of crimes go unreported and says the published statistics only represent publicly reported heists.

Currently, cryptocurrencies are operating in a sort of regulatory vacuum. Many newspapers articles have attempted to highlight the various consumer risks pertaining to cryptocurrencies. Japan witnessed such risks with loss of $6 billion worth of Bitcoin due to the hack of Mt. Gox¹⁶. Also, in case of any cryptocurrency fraud, the victim is clueless as there are no remedies available. Due to anonymity, it is difficult to figure out the perpetrator. Thus, suspect as well as the jurisdiction is unknown because of the absence of any dedicated legislation or regulation. If consumers need for protection stems from the informational inequity, it seems more than relevant to provide them with guidance on the strengths and weaknesses that accompany cryptocurrencies, and to warn them of the risks associated with it.

3. Cryptocurrency Driven Illegal Activities:

A separate issue, at the borderlines of the methods of legal regulations, mainly administrative and criminal law, is the preventing use cryptocurrencies for money laundering, tax evasion, terrorist funding and political funding. It appears that cryptocurrencies are better suited for this objective than cash. Cryptocurrencies such as bitcoins generally lack legal tender status and their broad acceptance does not require any obligation on any government or country. This is one of its weaknesses. Due to lack of regulations and oversight, cryptocurrencies lack consumer protection.

Cryptocurrencies are being used for money laundering because they provide considerable anonymity (yet not full anonymity), especially when used together with the TOR system. Further to that, they are global, easy to store and at the same time very difficult to be accessed to by unauthorized persons (e.g. law enforcement agency), since it is possible to use sophisticated encryption methods, the so called “wallets”. Bitcoins are a favorable means of payment for hackers. On the black market (more precisely Deep Web or Darknet) they are used to pay for drugs, pornography, counterfeited documents as well as weapons and ammunition¹⁷.

Cryptocurrencies facilitates near anonymity, elusiveness and high negotiability, real time transactions and withdrawal of funds which assists in money laundering¹⁸.

From this perspective cryptocurrencies are like a super tax haven; no taxation and complete anonymity, but also the added benefit of not being dependent on a bank. Cryptocurrencies possess the two most important characteristics of a traditional tax haven. First, because there is no jurisdiction in which they operate (they are “held” in cyberspace accounts known as online “wallets”), they are not subject to taxation at source. Second, cryptocurrency accounts are anonymous. Users can start as many online “wallets” as they want to buy or mine Bitcoins and trade them without ever providing any identifying information. Significantly, Bitcoin (and other cryptocurrencies) offer one additional major advantage to tax-evaders that traditional tax havens do not: the operation of Bitcoin is not dependent on the existence of financial intermediaries such as banks¹⁹. Bitcoin is exchangeable peer-to-peer by definition. Bitcoin thus seems immune to the developing international anti-evasion regimes. In cyberspace, financial institutions—the emerging agents of tax collection—are taken out of the picture. Thus, cryptocurrencies have the potential to become super tax havens²⁰.

In March 2014, Singapore announced that Singapore-based cryptocurrency intermediaries will be regulated to address potential money laundering and terrorist funding risks. This new regime mandates cryptocurrency exchanges based in Singapore, to verify the identities of their customers (by conducting Customer Due Diligence (CDD) and Know Your Customer (KYC)), and report any suspicious transactions to the Suspicious Transaction Reporting Office, the country’s financial intelligence unit²¹.

Given their transaction anonymity and user-friendliness, cryptocurrencies appeal to extremist groups as they offer a viable alternative to the mainstream financial system and fiat money. Bitcoins and similar cryptocurrencies have become attractive to terrorists who see them as a means to solicit donations, purchase or sell weapons in the dark web and move funds globally to boost their financial capacities. Anti-terrorism hacktivist Ghost Security Group had previously disclosed that the 2015 Charlie Hebdo attack in Paris was funded by Al Qaeda in the Arabian Peninsula (AQAP) through Bitcoin financing. The group has uncovered several Bitcoin funding sites exploited by IS supporters on the dark web with a digital wallet containing $3 million in Bitcoin value believed to have been used to finance the terror operation²².

As cryptocurrencies such as Bitcoins are finding greater acceptance in the commercial world, an increasing regulatory oversight and enhanced law enforcement scrutiny of its usage is incumbent. Authorities need to harness the potential of cryptocurrencies and understand its mechanism to facilitate earlier detection of terror financing, tax evasion and money laundering. Failure to do so would allow the unconstrained development of a potentially major financial apparatus waiting to be fully exploited by cyber-driven terrorism and corruption.

Current Position of Cryptocurrencies in India:

Mr. Arun Jaitley, Minister of Finance and Corporate Affairs, while presenting the budget 2018, expressly stated that the Indian Government does not consider cryptocurrency as legal tender. This statement has two facets attached to it. Firstly, cryptocurrency is not a legal tender and thus, when a person invests in them, he/she does so at their own risk. Secondly, the usage of cryptocurrencies is not barred but there is no right to seek redressal or remedies for matters involving cryptocurrency in India. Thus, it indicates that cryptocurrencies are not trusted means for payment and settlement in India²³.

To assess the position of cryptocurrency under Indian law, it must be analysed in accordance with different subject matters as provided under various Indian statutes.

· Payment & Settlement Systems Act, 2007:

This act gives RBI the power to certify any kind of pre-paid payment instrument. The RBI defined ‘Pre-paid Payment Instrument’ as: “Payment instruments that facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holders by cash, by debit to a bank account, or by credit card.”

Now, pertaining to cryptocurrency, it is observed that cryptocurrencies are not stable and fluctuates on a regular basis. Also, they may or may not be accepted as a means to facilitate purchase of goods and services, since it does not fulfill the requisites of a ‘Prepaid Payment Instrument’. Hence, it cannot be categorized under the purview of the Payment and Settlement Systems Act, 2007²⁴.

· Negotiable Instruments Act, 1881:

As per section 13 of this act a negotiable instrument is “a promissory note, bill of exchange or a cheque payable either to order or to bearer.” Hence, it is clear that a cryptocurrency does not have the characteristics to be included within a promissory note, bill of exchange or a cheque. And, thus, its specifications are not sufficient to be included under the scope of this Act.

· The Coinage Act, 2011:

According to section 2 (a) of The Coinage Act, 2011 “coin means any coin made of metal or any other material which is recognized as legal tender and stamped and issued by the Government or any authority empowered by the Government for this purpose which includes one-rupee note issued by Government and a commemorative coin.” However, the term “coin” expressly does not include postal orders, credit and debit card and e-money issued by any financial institution, post office or bank. Therefore, Bitcoins are not coins as per Coinage Act, 2011 and hence are not covered by it.

· Securities Contracts (Regulation) Act, 1955:

Section 2 (h) of Securities Contracts (Regulation) Act, 1956 defines the term “securities”. On critical analysis of this provision, it is observed that cryptocurrencies such as Bitcoins are beyond the ambit of“sub-clauses mentioned under this section. The only means by which a cryptocurrency can be included within the term “securities” is by using the sub-clause (ii) (a), which grants the Central Government the authority to declare certain instruments as securities. But, currently, the Central Government does not consider cryptocurrencies as legal tender and neither has it been given any due recognition. Thus, it does not fall under the above Act as well.”

· Reserve Bank of India Act, 1934 (RBI Act):

The “only manner for inclusion of cryptocurrency within the sphere of the RBI Act, 1934 is upon its scrutiny with respect to the definition of derivative. A cryptocurrency fulfils the first part of the definition, coming under the term instrument and having its value derived from a change in combination of several factors. But, the factors mentioned in the definition have no bearing upon the value of a cryptocurrency. Its value, i.e., its price goes higher upon its increasing demand, along with other factors like its recognition or it being declared illegal also affects its value. Thus, if cryptocurrencies are interpreted under the category of a variable of like nature, then only the RBI Act, 1934 deem to include them within its scope under the definition of a derivative.

· Foreign Exchange Management Act, 1999 (FEMA):

None of the Indian statutes interpret or define cryptocurrencies. Therefore, to evaluate the status of cryptocurrency, the definition of currency is to be looked under section 2(h) of Foreign Exchange Management Act, 1999. After“a close and critical analysis of“the given definition, it is observed that cryptocurrencies do not fit within any of the instruments in the given definition, but it does not exclude the possibility of the same being notified as currency by the Reserve Bank. However, until that happens, the situation has to be viewed from the fact that Japan has declared Bitcoin as a legal tender in its country and thus, any currency other than the Indian one will have to be considered as Foreign Currency under the FEMA and will have to comply with the rules and guidelines set under it.

· The Indian Copyright Act, 1957:

Cryptocurrencies can be co-related with The Copyright Act, 1957under the definition of “Computer Programme”. According to section 2(ffc) of the Copyright Act, 1957, a computer programme is “a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result”.

Hence, if cryptocurrencies are analyzed in a broad manner, then according to the above definition, which includes a set of instructions expressed in codes or any form will be sufficient enough to bring cryptocurrencies within its purview.

· Information Technology Act, 2000:

The Information Technology Act, 2000 has a term called asymmetric crypto system within its sphere. Cryptocurrencies functions by the issuance of a private key to each owner and holder of a cryptocurrency. Thus, it is intelligible that cryptocurrencies can be assessed and used as a part of the IT Act, 2000 under the definition of the expression “Asymmetric Crypto System”.

· General Clauses Act, 1897:

Section 3 (36) of the General Clauses Act, 1897 defines a movable property as “a property of every description, except immovable property.” Also, immovable property has been defined under section 3(26), i.e. “immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.” Thus, a cryptocurrency fulfills the requirements to fit within the definition of a computer programme, but, the same cannot be categorized under the definition of an immovable property. However, it can easily be included under the definition and be treated as a movable property within the General Clauses Act, 1897.

According to a judgment in the case, The Central Warehousing Corporation v. Central Bank of India Ltd. (1972)²⁵, it was held that “money can be considered as a movable property under section 3(36) of General Clauses Act.” Hence, money can be considered as a movable property and also cryptocurrency fulfils the requisites of movable property as per section 3 (36) of the General Clauses Act, 1897. Thus, upon the usage of mathematical equation, it can be concluded that cryptocurrency is a form of money. However, no Indian laws explicitly address this issue, which leads to ambiguity regarding the legal status of cryptocurrencies²⁶.

Current Supreme Court Case:

In April 2018, the Reserve Bank of India (RBI) issued a circular which prohibited all regulated financial institutions to enter into a partnership with individuals or organizations that deal with cryptocurrencies²⁷. Members of the Indian cryptocurrency community claim that this was unfair on the part of the RBI, and that their right to practice a trade or occupation is being violated. This led to a court battle between the RBI and the cryptocurrency community, which is an ongoing issue in the Supreme Court of India. Below are the all developments in India pertaining to cryptocurrencies:

1. The RBI released their first official statement on cryptocurrencies back in December 2013 in a Press Release titled ‘RBI cautions users of Virtual Currencies against Risks’, where they said that holding and trading cryptocurrencies such as Bitcoin can pose a “potential financial, operational, legal, customer protection and security related risk”²⁸.

A second Press Release was sent out by the RBI in February 2017, titled ‘RBI cautions users of Virtual Currencies’ where the bank stated that they have not given any official status or license to any firm in the country to deal with Bitcoins and virtual currencies.

The Reserve Bank sent out another Press Release in December of 2017, titled: ‘Reserve Bank cautions regarding risk of virtual currencies including Bitcoins’.

2. Finance Minister’s Statement [Dec 2017 - Feb 2018]

In December 2017, India’s Finance Minister Arun Jaitley commented that Cryptocurrencies are not a legal tender in India. This was followed by a similar statement in January 2018. However, the most impactful of his statements was perhaps the one that came on the 1st of February, 2018, where he again reiterated his statement..

3. RBI Issues Notification [Apr 2018]

Following multiple warnings on trading safely and making their stance on cryptocurrencies clear, the Reserve Bank of India, in a Notification on 6th of April, 2018 titled ‘Prohibition on dealing in Virtual Currencies (VCs)’. The Reserve Bank provided a three month period after which all regulated financial institutions will stop providing services to those people or firms involved in cryptocurrency-related transactions. This deadline ended on the 6th of July, 2018²⁹.

4. Exchanges Fight Back [Apr 2018]

Following this notification, Indian cryptocurrency exchanges, as well as Indian cryptocurrency traders were outraged. A number of online petitions started off, with over 125,000 people signing one of them. In a writ petition filed with the Delhi High Court, Ahmedabad based Company Kali Digital Ecosystems, the parent firm of CoinRecoil cryptocurrency exchange claimed that this notification violates Article 19(1)(g) of the Indian constitution - which guarantees the right to choose any occupation, trade or business, as well as Article 14, which prohibits discrimination among equals. The firm named the Reserve Bank of India, the finance ministry and the GST Council respondents to the petition. This petition was accepted by the Delhi High court on the 22nd of April.

5. Supreme Court Moves Hearing to September [July 2018]

20th of July was a date every cryptocurrency trader and investor in India was waiting for with bated breath. This was the date that the Supreme Court was going to decide the fate of cryptocurrencies and cryptocurrency exchanges in India. A short hearing did take place - and following that, the Supreme Court ruled that the hearing will now take place on the 11th of September.

6. Hearings Get Postponed Again [Sep 2018]

The Supreme Court had announced in July that the final hearings will take place on the 11th of September.

However, on the 11th of September, the court was hearing other lengthy matters - and after a couple of adjournments, the matter was announced to be heard the next day. The same happened on the next day as well, and on the 13th of September, it was announced that this case would now be heard on Tuesday, the 18th of September. However, a similar incident happened on Tuesday as well, which postponed the hearing to Wednesday - and on the afternoon of Wednesday, the 19th of September, the Supreme Court ruled that this hearing would now take place on Tuesday, the 25th of September.

7. Hearing To Take Place on 26th February [Jan 2019]

Since September, the case has been deferred a number of times because of reasons varying from the lack of paperwork to the Supreme Court announcing its hearing on more important matters, causing the case to be mentioned lower in the cause list. However, in a surprise move, the court decided to hear the case on the 17th of January, but senior advocates from both the sides were not present. The Supreme Court of India announced that the hearing will now take place on the 26th of February - and listed it on the top of the cause list.

8. Last opportunity given to the centre [Feb 2019]

The Supreme Court refused to hear any party pertaining to the pending cryptocurrency case and directed the Union of India to come up with a cryptocurrency regulatory policy within four weeks.

Depending on the definition, the weight of making a regulatory framework will fall either upon the RBI, or the Securities & Exchange Board of India (SEBI). The latter has already organized cryptocurrency study tours to the Switzerland, the UK and Japan for its officials, hinting the security regulator might take on the burden of creating a new Bitcoin law.

CONCLUSION:

The question is why should anyone even care about cryptocurrencies? Cryptocurrencies are still in their infancy stage and people who are not really techno-savvy, have not realized its potential. In the absence of such awareness, the laws of the same are also difficult to propose or even pass. The legislators lack that technical insight and have not been able to realize the need to enact laws. Cryptocurrencies like Bitcoin was created with the intention to offer an alternative to traditional system of payments by depriving it from governmental supervision, which often attracts conflicts. In light of all the foregoing, economists, regulators and other actors need to come forward with suggestions. It is time for the countries to address the elephant in the room. In order to allow nation’s continuing growth, regulatory efforts in such areas need to be done now and in reaction to unraveling issues. Creation of Bitcoin was a democratic process for peers, so that they are in control of their own transactions of money³⁰.

Thus, the fate of Bitcoin and other crypto-currencies lies in the hands of every one, as Satoshi Nakamoto intended. If users continue to use it, this will pressure regulators to work with it rather than against it and in turn recognize its potential benefits. Only time will tell whether the industry, the market, or national regulators will be able to bring about the stability and security necessary to the virtual currency market through scalable regulation that wouldn’t prevent further financial innovation, but, one thing is certain, cryptocurrencies will surely have a long-lasting impression on the financial landscape. To recapitulate, the use of cryptocurrency in India is currently not “illegal” but is “unregulated”. Cryptocurrency has a huge potential for growth and is under the ambit of terms like “computer programme”, “movable property”, “foreign currency” and “money”, however, the same has not been pronounced or even adjudicated in any court of law within the country.

REFERENCE:

1. Satoshi Nakamoto, Bitcoin: “A Peer-to-Peer Electronic Cash System”, available at: http://Bitcoin.org/Bitcoin.pdf

2. Blockchain and Cryptocurrency: The Emerging Regulatory Framework (https://www.lexology.com/library/detail.aspx?g=85676d 29-5a50-4437-9405-2dd295a69dbd)

3. Jim Harper, Bitcoin Foundation Lobbying, BITCOIN FOUND. (July 9, 2014) https://bitcoinfoundation.ghost.io/bitcoin-foundation-lobbying/.

4. ArtusKrohn-Grimberghe& Christoph Sorge, Practical Aspects of the Bitcoin System, CRYPTOME, http://cryptome.org/2013/09/bitcoin-practical-aspects.pdf (last visited Jan. 29, 2019).

5. Pedro Hernandez, Microsoft: Bitcoin Accepted Here, EWEEK (Dec. 14th, 2014), http://www.eweek.com/cloud/microsoft-bitcoin-accepted-here.html.

6. Iansiti, Marco and Karim R. Lakhani. 2017. “The Truth About Blockchain.” Harvard Business Review 95(1): 118–127.

7. R. M. Lastra, International Financial and Monetary Law, Oxford 2015, pp. 12 – 13.

8. John Butler, Is Money a Store of Value?, FIN. SENSE (Nov. 3rd, 2010, 1 :00 AM), http://www.financialsense.com/contributors/john-butler-john-boylan/ismoney-a-store-of-value.

9. US Senate, 2013. Beyond silk road: potential risks, threats, and promises of virtual currencies. In: Committee on Homeland Security and Governmental Affairs Hearings held November 18–19, 2013. Available from hsgac.senate.gov/hearings/beyond-silk-road-potential-risks-threats-and-promises-of-virtual-currencies.

10. Bitcoin Basics, Bitcoin Trading Pro, http://bitcointradingpro.com/bitcoin-basics/ (last visited Jan. 30, 2019).

11. See Ballentine’s Law Dictionary 225 (3d ed. 1969); State ex rel. Moose v. Frank, 169 S.W. 333, 336 (Ark. 1914). See also Williams v. Board of Comm’rs, 114 P. 858, 859-60 (Kan. 1911).

12. Hughes, Scott D. 2017. “Cryptocurrency Regulations and Enforcement in the U.S.” Western State University Law Review 45 (1): 1–28.

13. Ian Gamble, CRA Confirms its View of Bitcoin Transactions, Lexology (Jan. 27, 2014), http://www.lexology.com/library/detail.aspx?g=f0fb2563-91a2-4128- 9e17-ee021efb0509.

14. Liedel, Deidre A. 2018.“The Taxation of Bitcoin: How the IRS Views Cryptocurrencies.” Drake Law Review 66 (1): 107–145.

15. Emerging regulation for tax law framework of bitcoin and other cryptocurrencies (https://klasingassociates.com/emerging-regulations-create-tax-lawframework-bitcoin-cryptocurrencies/)

16. The Troubling Holes in MtGox’s Account of How It Lost $600 Million in Bitcoins; Available at: http://www.technologyreview.com/view/526161/thetroubling-holes-in-mtgoxs-account-of-how-it-lost-600-million-in-bitcoins/ Last accessed: May 2, 2019

17. See M. C. Van Hout, T. Bingham, Silk Road, the virtual drug marketplace: A single case study of user experiences, International Journal of Drug Policy 2013, Vol. 24, Issue 5, p. 385–391,

18. Gruber, Sarah. 2013. Exchanges the Next Virtual Havens for Money Laundering and Tax Evasion.” Quinnipiac Law Review 32 (1): 135–208.

19. James Melik, ‘Digital Currency: Brave New World or Criminal Haven?’ (BBC.co.uk , 3 October 2012)

20. See Anthony Freeman, Bitcoin: The Ultimate Offshore Bank Account?, ECONOMICS AND LIBERTY: OBSERVATIONS FROM A. FREEMAN (Aug. 23, 2011), http://economicsandliberty.wordpress.com/2011/08/23/bitcoin-the-ultimate-offshore-bankaccount/

21. Hughes, Sarah Jane and Stephen T. Middlebrook. 2015. “Advancing a Framework for Regulating Cryptocurrency Payments Intermediaries.” Yale Journal on Regulation 32 (2): 495–559.

22. See BorzoDaragahi, “ISIS Declares Its Own Currency,” Financial Times online, November 13, 2014.

23. See, for instance Marc Andreessen, “Why Bitcoin Matters,” New York Times online, January 21, 2014

24. RBI Database, “Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India”.

25. AIR 1974 AP 8

26. Legality of bitcoin and cryptocurrencies ( https://bitconnect.in/legality-bitcoin-cryptocurrency/ )

27. RBI, Master Circular – Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/ Obligation of banks under PMLA, 2002, RBI/2013-14/94, available at: http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8179.

28. RBI Cautions Users of Virtual Currencies Against Risks, Press Release : 2013-2014/1261 dated December 24, 2013 available at: http://rbi.org.in/scripts/ BS_PressReleaseDisplay.aspx?prid=30247

29. See, http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=1902

30. Nicholas A. Plassaras, ‘Regulating digital currencies: Bringing Bitcoin within the reach of the IMF’, Forthcoming, 14 Chi J intl (2013) Pg. 12.

Received on 17.05.2019 Modified on 24.05.2019

nt. J. Rev. and Res. Social Sci. 2019; 7(2): 365-375.

DOI: 10.5958/2454-2687.2019.00028.5