Has the Bitcoin lobby put pressure on MeitY?

[This is in continuation of the previous article]

At a time when the “Personal Data Protection Bill 2019” needs to be passed into an act and atleast 2 or 3 meetings of the JPC has to be completed before the next Parliamentary session, it is beyond our comprehension that MeitY is opening up the issue of amendment of the ITA 2000/8.

If MeitY was really interested, it could have issued the Section 69 and Section 79 notifications which are not amendments to the Act but are only notifications to be issued by the Ministry and later placed before the Parliament. MeitY could have also acted upon whatever suggestions were made by the T K Vishwanathan Committee. 

Instead of focussing on the PDPA at this point of time, there was no hurry to push for a discussion on amendment of ITA 2000/8.

The only reason which comes to our mind to justify this eagerness could be a pressure from the Bitcoin lobby to legitimize the Bitcoin and other Crypto Currencies.

This lobby was successful in getting a Bollywood story line judgement from the Supreme Court which effectively indicated a view  “RBI has the power to regulate Bit coin but the circular they have issued is struck down for reasons of lack of proportionality”.

If RBI comes up with another circular and then Supreme Court will again go into an examination, and perhaps stay the circular, and after two years again come up with the “Proportionality excuse” to strike it down again. The lobby knows that they are standing on a very tenuous ground and if the matter goes before any other bench the decision could be different. Hence they appear to be now moving with the MeitY to bring in an amendment to the ITA 2000 which could help them to declare Bitcoin as legal.

Mr Nayonika Dutta, Deputy Director, e-Commerce Policy at DPIIT, has been quoted in the article in ET   as follows.

“though the Act was last amended in 2008, recent technological innovations such as social media, digital services, ecommerce services, artificial intelligence, machine learning, smart devices, Internet of Things and blockchain have changed the digital ecosystem significantly. While on the one hand, these innovations have provided opportunities for growth and efficiency gains, on the other, they also pose significant challenge ..”

Note the inclusion of the “Blockchain” in the list of technological developments mentioned here. The timing of the MeitY circular was almost immediately after the Supreme Court judgement and there appears to be a nexus between the Bitcoin lobby and the issue of this “Amend ITA 2000”  demand.

Naavi has in the past pointed out that the best way to ban Bitcoin is through ITA 2000 where we can add one more item under the Schedule I under “Excluded Instruments”.

Presently Section 1(4) and the associated Schedule I states as follows:

“Nothing in this Act shall apply to documents or transactions specified in the First Schedule by way of addition or deletion of entries thereto.”

1. 1. 1. A Negotiable Instrument (Other than a cheque) as defined in Section 13 of the Negotiable Instruments Act 1881 (26 of 1881)
      2.  A Power of Attorney as defined in section 1A of the Power of Attorney Act 1882 (7 of 1882)
      3.  A trust as defined in section 3 of the Indian Trusts Act, 1882 (2 of 1882)
      4.  A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925 (39 of 1925) including any testamentary deposition whatever name called
      5.  Any contract for the sale or conveyance of immovable property or any interest in such property

Because an electronic document that represents the Bitcoin is not in the excluded list, it is recognized as an “Electronic Document”.

The RBI Act Section 22, states that ” The Bank shall have the sole right to issue bank notes in .. and the provisions of this Act applicable to bank notes shall, unless a contrary intention appears, apply to all currency notes of the Government of India issued either by the or by the Bank in like manner as if such currency notes were bank notes, and references in this Act to bank notes shall be construed accordingly”. Hence any document which is recognized in law.

The “Sole Right” indicated here has to be interpreted as a “Prohibition” for any private party to issue a “Currency Note like” instrument including a “Promissory Note payable to a bearer on demand”.

The Bitcoin is an electronic document recognized as such by ITA 2000. But in the representation as “Crypto Currency”, the Bitcoin electronic document is used as a substitute for the “Bank Note” or “Currency Note”. The frequent pictorial representation of the Bitcoin as a “Coin” also is an attempt to confuse the consumers to believing that it is a substitute for the legacy currency notes and coins.

When a bitcoin is used as a medium in a private electronic space as a “Game website”, the concept lies below the radar. But when the Banking system starts supporting the Bitcoin and the Bitcoin lobby threatens the RBI that they will destroy the legacy currency system,   then it assumes the role of a “Currency”. When Amazon accepts Bitcoin, when advertisements appear in Times of India that Bitcoin is a good investment proposition, then any sovereign Government has to put this down. Otherwise, Bitcoin will be like a Corona Virus and spread to the entire community and destroy our economy.

Unfortunately our Supreme Court has failed miserably to understand this threat to the society or chosen to look the other way and the Bitcoin lobby feels emboldened. They know that they have the power of black money in their hands and they can buy decision maker by transferring a few bitcoins to a numbered Bitcoin wallet system.

However much Mr Narendra Modi may try to reduce the black money in the form of official currency, he will not be able to identify and control black money or benami property in the form of Bitcoin or any other private Crypto Currency. The system of corruption which Mr Modi is trying to fight will thrive strongly if Bitcoin is not locked down immediately.

The Supreme Court judgement has been like the Tablighi conference that spread Corona Virus to thousands in the country and has given a firm base to the Bitcoin lobby promoting the Bitcoin as a safe investment haven. There is no doubt that this has also contributed to the prolonged down trend in the Stock markets since many  might have shifted their investments to Bitcoins. Mrs Nirmal Seetharaman might not have been able to identify this and needs to sit with some senior RBI officials to understand how the “Block Chain Technology” is being used as a cover for promoting Bitcoins.

With the complete loss of confidence on the Supreme Court, the hope for honest tax payers of India is now only Mr Modi and Mr Amit Shah. They need to take time off from the Corona virus  related issues to ensuring that Bitcoin does not become a “Financial Corona” and hurt our economy. 

Mr Ravi Shankar Prasad as the Minister in charge of MeitY needs to provide a public clarification on why the Amendment to ITA 2000 has been taken up on a priority basis over and above PDPA and what is the intention of those who have floated the idea when they have been unable to get ordinary administrative notifications on Section 69 or 79A issued.

What is necessary immediately to show the right intentions, is for MeitY to issue a notification to amend Schedule I of ITA 2008 and add the following exclusion :

vi: Any instrument that purports to represent a Currency or Coin that could be used for exchange of goods like a Bank note.

This does not require an amendment to the Act can be issued immediately during the Corona lock out itself, if the Meity/Ravishankar Prasad/Nirmala Sitharaman are  committed to the banning of Bitcoin and Crypto Currency . Bitcoin being  a Digital Black Money representation used by the Cyber criminals and terrorists, even Mr Amit Shah should be interested in this amendment. Mr Piyush Goyal also has to check why DPIIT was in such a hurry to issue the circular when larger issues related to the lock down are begging to be attended to.

If these honourable Minsiters are serious in tackling black money in India, they should immediately move the above amendment as a notification before any larger amendment to ITA 2000.

Naavi