The crypto dilemma stems from concerns about the unregulated currency having a destabilizing effect on the country. | Photo credit: Getty Images/iStockphoto
The story so far:
The Investor Education and Protection Fund (IEPF) will soon launch an outreach program to raise awareness about cryptocurrencies and online gambling. The need for awareness is based on the observation that crypto-assets and online games (which extend to gambling and betting) are still being promoted in a risky way despite recent turmoil in the industry.
What is the Investor Education and Protection Fund (IEPF)?
The Investor Education and Protection Fund (IEPF) is managed by the IEPF Authority, which was established in 2016 under the provisions of Section 125 of the Companies Act 2013. The The Authority is charged with the responsibility of the administration of the IEPF, which, in addition to educating investors, reimburses shares, unclaimed dividends, matured deposits and debentures, etc. to rights holders.
When it comes to investment education, the idea is to reach out to investing households, housewives and professionals in rural and urban areas and teach them the basics. Areas of intervention include primary and secondary capital markets, various savings instruments, investment instruments (such as mutual funds, stocks, among others), investor awareness of questionable Ponzi schemes and voucher funds and existing grievance redress mechanisms, among other things. Till the end of October, it had conducted more than 65,000 outreach programs to 30 lakh citizens.
Why is there concern about cryptocurrency?
The crypto dilemma stems from concerns about unregulated currency having a destabilizing effect on a country’s monetary and fiscal stability.
In addition, crypto exchanges in India are under investigation for their alleged involvement in illegal practices such as drug trafficking, money laundering, violation of foreign exchange laws and evasion of money. the GST. As of December 14, proceeds of crime amounting to ₹907.48 crore have been seized/seized, three people have been arrested and four prosecution cases have been filed with the Special Court, Money Laundering Prevention Act silver (PMLA).
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The Reserve Bank of India (RBI) has recommended developing legislation on the sector. He is of the opinion that cryptocurrencies should be banned. In a written response to the Lok Sabha recently, Minister of State for Finance Pankaj Chaudhary said that crypto assets are by definition borderless and therefore any legislation (regulatory or prohibition) would require international collaboration to prevent regulatory arbitrage. Collaboration should involve risk-benefit assessment and the evolution of common taxonomy and standards.
Will an awareness program help?
Vipul Kharbanda, non-resident researcher at the Center for Internet and Society (CIS), while supporting this decision, points out two concerns: firstly, in addition to the awareness program, there must be a regulatory mechanism for the crypto industry. Second, he says the message must be correct. “If the government takes an overbearing approach and starts saying things like virtual currency is not legal in India, it will not be entirely true. People may wrongly assume that it is illegal,” says- he, adding, “One can engage in illegal transactions like money laundering using crypto assets. But illegal transactions can also be performed using legal banking channels.”
Rajagopal Menon, vice president of crypto exchange WazirX, also welcomed the move. “Investing in cryptocurrencies can be a complex and risky business as the category is extremely volatile and operates around the clock. It is important that potential investors research carefully before making a decision,” he said. he declares.
Regarding the allegations, Mr Menon told The Hindu: “The immutable and public nature of blockchain makes crypto a poor choice for money laundering as it allows law enforcement to uncover and to trace money laundering much more easily than cash transactions”.
What about online games?
The Ministry of Electronics and Information Technology (MeitY) has been named the Nodal Industry for Online Gaming in India; for e-sports, the nodal agency is the Sports Department, under the supervision of the Ministry of Youth and Sports. A framework proposed for central regulation by MeitY should solve the problems faced by the sector.
For example, there is confusion between the definitions of a “game of chance” such as games of fancy and a “game of skill”, a term which was used in the Public Gambling Act (1867) but which has not been specified. There are also risks related to cybercrime.
Supreme Court barrister and founding partner of law firm Ark Legal, Khushbu Jain, told The Hindu that in a “game of skill”, although the element of chance cannot be entirely ruled out, it is the “skill element” (mental or physical skill of the user) that plays a predominant role in determining the outcome of the game rather than pure chance. She pointed out that “a look at the decisions of the Supreme Court and several high courts clearly establishes that ‘games of skill’ are legitimate commercial activities protected by Article 19(1)(g) of the the Indian Constitution. These judgments also emphasized a clear distinction between “games of skill” and “games of chance”. Despite these court rulings, online games of skill have been restricted in a few states due to addiction, financial loss, and the thin line between skill and chance.
From an industry perspective, Roland Landers, CEO of industry body, All India Gaming Federation (AIGF), welcomed the move. “The online gambling industry is increasingly concerned about the threat of illegal offshore gambling websites that provide their services and advertise rampantly to innocent Indian users, often posing as boring -legitimate forms of gambling.” He said it has become increasingly difficult to tell the difference between good and bad operators.