Delhi Court attempts to decode the cryptic case of cryptocurrencies in India

INTRODUCTION:

Cryptocurrencies, worryingly unregulated, decentralised virtual currencies, are steadily gaining traction in the Indian transaction landscape. With digitalisation and smart contracts becoming the new norm (especially considering the COVID-19 pandemic), global trade in cryptocurrencies has increased by leaps and bounds. However, one cannot ignore the unprecedented rise in cybercrimes across the globe, relatable to virtual currencies. The expansion of the cryptocurrency landscape poses various challenges in the form of regulatory, legal, and operational risks. Whilst appropriate measures to regulate cryptocurrencies are the need of the hour, the Indian judiciary has been rather proactive in its dealing with such cryptic virtual currencies.


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Into the Web - AML Risks of Virtual Assets - Part 1

Part I of this article explores the current Indian regulatory and legal framework governing the virtual asset industry and recommendations for AML/CFT compliance in respect of virtual asssets.

Indian legal framework

The virtual asset industry has had a somewhat difficult time in India, with the RBI banning any regulated entities from providing services to any individual or business, dealing in digital currencies, given the risks involved in such transactions. The term ‘services’ included maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges, dealing with them and transferring or receipt of money in accounts relating to purchase/ sale of VCs or facilitating the same thereof.
Continue Reading Into the Web: AML Risks of Virtual Assets? – Part II

Into the Web - AML Risks of Virtual Assets - Part 1

Nothing is permanent but change.

                                                                            – Heraclitus

Part I of this article explores the anti-money laundering risks associated with virtual assets and provides a glance at the current international regulatory and legal framework governing the virtual asset industry.

Technology has evolved to a point where we have to redefine what we assume would be easy to legally categorise. The evolution of virtual assets is such an example — with a dynamic categorisation of virtual assets, as also securities such as NFTs (a Non-Fungible Token, which is a unit of data stored on a digital ledger called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. Examples include: photos, videos, audio, and other types of digital files) and DeFi (Decentralised Finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilises smart contracts on blockchains, example: Ethereum).
Continue Reading Into the Web: AML Risks of Virtual Assets? – Part I

FIG Paper (No. 7) - Cryptocurrency in India

Introduction:

In recent years, investments in cryptocurrencies have witnessed exponential growth, with growing recognition by established financial institutions across the globe and cryptocurrencies morphing from a digital payment method to an asset class for investment.
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New disclosure obligation in Financial Statements for companies holding cryptocurrencies - Are Regulators testing waters?

Context

India is witnessing a rapid increase in the number of crypto exchanges as well as cryptocurrency transactions. As per publicly available data, the average daily cryptocurrency trading volumes across the top Indian exchanges have grown nearly 500% from March 2020 to December 2020. Globally, countries such as Switzerland, Singapore and the US have been pro-active in undertaking cryptocurrency transactions, and simultaneously creating a robust regulatory framework for the same. In fact, investors from these countries have also been investing in Indian cryptocurrency exchanges.
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