'Another NSEL Scam Is Brewing': Plea Before Bombay High Court Seeks Regulation Of Cryptocurrency Market In India

A lawyer has filed a public interest litigation before the Bombay High Court, seeking directions to the Union of India for formulating a comprehensive mechanism to rectify the risks involved in the largely unregulated cryptocurrency market in India, including appropriate legislation and guidelines. The petitioner has approached the High Court to issue directions to the respondent state for formulating law/ rules governing the use of cryptocurrency within India, preparing a robust mechanism for monitoring international crypto transactions, overseeing the registration of crypto exchange platforms, instituting a proper grievance redressal mechanism against trading platforms, and putting in place a foolproof taxation scheme for such transactions. In the Internet Association case, RBI has referred to a few practical difficulties in regulating crypto markets, namely, i) Lack of structured mechanism in handling customer grievances, ii) its immense potential to be utilized for illegal activities due to the pseudo-anonymity/ anonymity offered, iii) KYC norms ineffective since the anonymity of VCs cannot be remedied, iv) Cross border nature of trade in VCs and lack of accountability The Petition notes that the Reserve Bank of India has repeatedly cautioned the users and traders in virtual currencies about the risks involved via public notices in 2013 and 2017. Advocate petitioner also make remarks about the loss of revenue on crypto exchanges worth crores due to the dearth of clarity in the Income Tax Act or Goods And Services Tax Act. Even when India has the world's highest number of crypto investors, the country hasn't enacted any statutory provisions to regulate crypto trade, unlike other prominent countries, says the petitioner advocate.