Naavi.org

Black Money in India is more powerful than even Mr Modi. Hence banning of Crypto Currencies which means banning of Digital Black Money cannot be done easily by the Government even of Mr Modi or Mr Amit Shah would swear by National Interests.

Even Mr Mohan Bhagwat of  RSS or Dr Subramanya Swamy are silent on the banning of Crypto Currency.

No body seems to have the guts to take Crypto Currencies by the scruff of its neck and banish it from India.

This week the Crypto Currency Bill in some revised form is expected to be presented in the Parliament. The Ministry of Finance would be feverishly working with all the Crypto Currency exchanges and the Corrupt media elements to draft it in such a manner that Crypto Currencies will continue to be an asset class which SEBI will regulate and IT  department will tax.

I am reminded of the story of Bhasmasura in our mythology who was given a boon by Lord Shiva that he can destroy anybody by placing his hand over his head and Bhasmasura wanted to test it on Lord Shiva himself. Likewise, if Bitcoin and Crypto Currencies get the sanction from the Government in any form, it will be a boon with which the country’s economy would be destroyed. The current drop in the stock markets is not because of the Omicron but in anticipation of the approval to be given to Crypto Currencies in the Bill and consequent shift of investment from shares and other investments in the stock market to the Bitcoin and other crypto currencies.

We respect Mr Modi and Mr Amit Shah and their intentions to do good to India but we cannot underestimate the power of black money and just as Mr Modi retreated in the Farm laws issue, it would not be surprising if Mr Modi develops a cold feet in the Crypto currency regulation and yield to the power of digital black money.

One possibility is that the Bill will be referred to a Standing Committee and the issue would be shelved for the time being.

We are therefore looking out for a black day for India when Crypto Currencies are given a license to devour the legit currency and along with it the economy built by the tax payer’s money.

Hope I am proved wrong.

We sincerely urge Mr Modi not to be the Lord Shiva who gave the boon to Bhasmasura but Lord Vishnu who saved the world by destroying Bhasmasura in the form of Mohini.

Naavi

PDPB 2019 (Personal Data Protection Bill 2019) was in its current draft stage since December 2019. In the last two years, the JPC held an incredible 78 meetings of which the first 66 were chaired by Mrs Meenakshi Lekhi who was subsequently promoted as a Minister and  the rest by Shri PP Choudhary who took over as the next chairman later on.

At the end of this exercise, a new version of PDPB now titled Data Protection Bill 2021 (DPB 2021) emerged and is now before the Parliament.

When the legislative history of PDPB 2021 is written, it is necessary to understand how the exercise which started with the suggestion of the Supreme Court judgement in the Justice Puttaswamy case resulted in the Government forming the Justice Srikrishna Committee which came up with PDPB 2018, which later became PDPB 2019 with the incorporation of public comments and which has now taken the new avatar of DPB 2021.

It is the privilege of the Parliamentarians to draft the law in whatever manner they think fit and we in the industry have to be accept it and move forward. In the professional circles, we can continue to debate what improvements could have been done and what mistakes could have been avoided, but for a Bill which has taken so long to see the light of the day, it would be cruel if we start delaying its adoption further raising demands for more correction.

The exercise for an exclusive  Personal Data Protection Bill first started with the Personal Data Protection Bill 2006 (See a copy of the Bill here)

This means that after the ITA 2000 was introduced on 17th October 2000 containing Section 43 which imposed penalties for failure of an organization to protect data (both personal and non personal), the first attempt at an exclusive personal data protection law was initiated with the PDPB 2006. It has now taken 15 years for PDPB 2006 to evolve into DPB 2021. During this long period of gestation, it was evident that the Business did not want the shackles of the law and any provision on “Surveillance” which the Government wanted to be included in the Bill came to be criticised as an undemocratic move and faced the opposition of the Habitual Nay Sayers and genuine privacy activists acting together.

As a result the Personal Data Legislation remained in the background.

Since the nudge from the Supreme Court in 2017, it has taken 4 more years to reach the current state and during this time there have been a consistent attempt to suggest changes one after the other to the extent that no consensus could be arrived at and the adoption of the bill is delayed at each stage.

Even the current version which will be before the Parliament will have 7 members out of 30 in the JPC submitting dissent notes and the Tech industry already announcing that they will challenge the law in the Supreme Court once it becomes the law.

Even if 2 years time would be given by the act for implementation, it is likely that most of the industry will use the time to wait for the Supreme Court to come up with its decision on the challenge and continue to drift in implementation of the law. The Government would have it’s own trademark “Respect” for the “Pending Supreme Court Verdict” and perhaps  focus more on the other  pressing matters  rather than getting the law cleared in the Supreme Court.

It is therefore a time of uncertainty ahead of us on the implementation schedule of the law. It is unfortunate that even Pakistan and China can now boast of “Personal Data Protection Laws” similar to GDPR or CCPA or Singapore PDPA 2012 while India is still unable to get the legislation through.

The undersigned however has been clearly advocating that the personal data protection is embedded in Information Technology Act 2000 particularly after the amendments of 2008 which introduced Section 43A and 72A.

Industries may ignore but the law is clear that penalties can be imposed for not protecting sensitive personal data under Section 43A or 72A by the Adjudicators under ITA 2000. ITA 2000/8 compliance is therefore the current “GDPR of India”.

When PDPB 2018/2019 was drafted, the legislative intent was clear that the new Bill will replace Section 43A of the ITA 2000/8 and therefore the current Personal Data Protection under ITA 2000/8 would transform into 98 sections of PDPB.

ITA 2000/8 was a single law which protected both personal and non personal data misuse and it was expected to continue its role as “Non Personal Data Protection Law” even after PDPB was enacted. However, the intervention of the Kris Gopalakrishnan Committee in between suggesting a “Non Personal Data Governance Act” (NPDGA) has confused the legislators to an extent that an idea to merge the proposed PDPB 2019 with the future NPDGA into one law and re name PDPB 2019 as Data Protection Bill 2021 (DPB 2021) has gained acceptance.

Whether this was a wise move or not only time will tell. But the Supreme Court may feel that…”we wanted you to bring in Personal Data Protection law to protect Privacy but you are ending up with designing a Cyber Security law by combining Personal Data Protection and Non Personal Data Protection into one law and also perhaps introducing Non Personal Data Governance through administrative guidelines from the Data Protection Authority in the coming days.”

As a result, the focus expected of a law to protect Privacy may get diluted when DPA tries to take over the work of Director General of CERT IN and start taking up Cyber Security issues instead of focussing entirely on Personal Data protection issues.

Consequent to this change in the legislative intent behind PDPA 2021, Section 1 (Name Clause) has been modified. More importantly, Section 2 on “Applicability” has also been modified.

In section 2 the following amendments have been made

Anonymised data by definition means data in such form that the Data Principal cannot be identified as per the standards of anonymization prescribed by the authority. Unless therefore the Authority falters in fixing the Anonymization standard, “Anonymised personal data” has no relevance to the “Privacy Protection” required under the Constitution and the Supreme Court Judgement.

The JPC has however bought the idea that “Anonymization” can be broken by use of certain techniques and therefore added it in the legislation for personal data.

However, it is necessary for us to remember that even “Encryption” and “”Digital Signature” which have special status in law can be broken by hackers and if the “Anonymisation Standard” is defective, the problem is like having a low level of encryption and finding fault with the concessions given to the breach of encrypted data or digital signature.

Calling “Anonymised Data” as requiring regulations under Personal Data protection is like treating all “Encrypted Data” as “Unencrypted”  data and all “Digitally signed document” as “Undigitally signed”.

Hence the inclusion of the words “including anonymised personal data” in Section 2(d) is unimaginative.

We can argue that even if Section 2(d) says DPA 2021 is applicable for Anonymised Personal Data, only if there are other provisions in the law about “Anonymised Personal Data”, we should consider it important and otherwise we can forget it.

However, this has opened the possibility that an imaginative DPA can place regulations on “Anonymised Personal Data” which may create issues for the Big Data Industry or the Data Science field.

In case the regulation is only that “Consent” should be obtained for “Anonymisation”, it is not difficult to implement it.

But blocking “Anonymisation” as a right of the Data Fiduciary  would seriously hurt the “Monetization Prospect” of “Anonymised Personal Data” which is actually a “Non Personal Data”.  This could be considered as an infringement of the fundamental right to carry on a business which does not affect the Right to Privacy of any person whose personal data is anonymised.

In a way the law has given into the perceived power of the hackers and considered that “Anonymisation” is not possible and hence anonymised personal data should not be available for monetization.

Instead of caving into the power of hackers, the Government should have considered increasing the penalty for “Reidentification of the De-Identified Information” from an imprisonment of 3 years to some thing around 10 years.  This would have increased the deterrence and mitigated the risk of de-anonymisation of anonymised personal information.

In the long run, this will be a point to regret. Coupled with the  section that requires the algorithm of processing to be made transparent and hardware and software used in personal data processing to be “Certified”, the Data Analytics industry and Big Data Industry would find it suffocating to carry on their activities. On the other hand these provisions donot add anything additional to the protection of Privacy.

The Government therefore appears to have opened a breach to let the Judiciary find fault with the drafting of the legislation.

At this point of time it appears that this cannot be remedied except by reverting  Section 2 to the previous version and deleting the provision on hardware software certification as well as the algorithmic transparency. All these responsibilities to the extent it adversely affects the Privacy of an individual can be implemented under the concept of “Data Fiduciary” and does not require the amendments as proposed.

As regards “Reporting of Data Breach of Non Personal Information”, it was a responsibility already assigned to the CERT IN. There was perhaps no justification to take over the responsibility of the CERT IN in this respect.

If there was a concern that some data fiduciaries could report a personal data breach as non personal data breach to the CERT IN and avoid scrutiny by the DPA, a provision culd have been inserted for sharing of all data breach reports made to CERT IN with DPA along with a comment/assurance from the CERT IN director that no personal data breach is suspected in the reported data breach.

If these issues had been addressed, there was no need to change  the perspective of the law from “Personal Data Protection” to “Non Personal Data Protection”.

However, from the compliance perspective, we must accept the changes as it would be finally passed by the Parliament and include the “Non Personal Data Protection and Governance” as part of Personal Data Protection compliance.

Naavi

(The above are the personal views of Naavi and does not represent the views of any organization.)

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?

The presentation of the Crypto regulation bill in the Parliament has put the industry promotion on an over drive. Zee Business recently ran a series of panel discussions to promote crypto currency, in a well crafted advertorial exercise. People who donot know that Cryptos are the currencies of criminals would have been very much impressed with the discussions which steered clear of the illegal use of Cryptos and spoke as if it is only a technology marvel.

There is no doubt that Bitcoins and other Cryptos as a system are attractive as a “Virtual Game” but when we discuss them as a “Currency” or an “Asset” we are laying down a trap for gullible investors to start investing and bring pressure on the Government to let it survive.

A new threat is getting added to the dangers of Bitcoins in the form of “Meta verse”, the “Virtual Real Estate” and Non Fungible Tokens (NFT) all of which are meant to  promote the Cryptos as the currency of the Virtual Space.

When “Domain Names” were new, there was a medical practitioner in Salem who had bought two “Web Sites” thinking that he had bought “Sites” similar to the physical property. When after one year the web pages under the URL disappeared, he filed a police complaint that his “Site” was stolen. Salem police at that time came to Chennai to take the assistance of the undersigned in understanding what was stolen.

There have been earlier legal cases in secondlife.com where a fraudster had bought virtual plots before an official auction and another case when furniture in a virtual cafe had disappeared.

FaceBook has been running several games such as “Farmville” in which virtual properties can be acquired either through gaming or by paying upfront cash.

As long as such games remained games there was fun and everybody enjoyed the game though the problem of “Addiction” was still there.

Secondlife.com first started the trend of linking the game experience to the real world by creating the “Virtual Currency” in the name of Linden and created an exchange market for converting US dollars to Linden and Viceversa. This was not “Crypto” but they served the purpose of a digital currency outside the regulatory system for fiat currencies.

The Cryptos like Bitcoin took the concept further and created a currency without even the benefit of providing a fun through games which secondlife.com or Farmville games provided.

Now a combination of the games and cryptos are emerging with the creation of “Tokenized Virtual Property” (Non Fungible Tokens or NFTs) which can be bought and sold with the use of Cryptos. These websites which donot provide any assurance of even short term survival are offering “Virtual Property” to be bought with a payment through Cryptos. The properties may be linked to Virtual Reality apps so that one can get an immersive experience of visiting, living in or otherwise using the virtual property.

See article in NYTimes

The Metaverse allows a user to take an “Avatar” which may be our identified face or other identities and perhaps pseudo identities. One can buy and deliver tokenized digital assets including music or art etc in the Meta Verse environment…all with Crypto currencies.

The Meta verse is therefore being created to provide a use for Cryptos and increase the market for Cryptos. Hence Meta Verse and Cryptos are to be considered as associated services.

There was one report that virtual land within Metaverse was recently sold for $2.43 million and was used to host virtual fashion shows for avatars.

The currency used in sandbox.com is “SAND” and is itself available to be brought in many Crypto exchanges.

Superworldapp.com allows you to buy and sell property anywhere in the world with the use of ETH.

In one perspective, all these developments are nothing but Video games in which some betting is being placed in terms of hard currency.

Some may argue that this is entertainment and has a value. If some body thinks that it is worth the money, it is their choice.

But as independent observers in the society, one needs to look at the long term impact of such games.

Apart from these games being constructed to support the digital black money of Crypto Currencies, the games are likely to make many individuals go crazy. The experience is immersive and enjoyable as long as it is for a few minutes. But it will soon become an addiction and start driving people crazy.

If Blue Whale could drive people to commit suicides, these games will drive them to be lunatics. The unfortunate part of it is that people will spend a fortune to become lunatics.

Policy makers need to be aware of the ill effects of this developments on the society and recognize a need to ensure that our younger generation is not destroyed by such so called “Innovations”.

Technology is losing all self control and the future looks very threatening. Just as we discuss the threats from Global warming etc., it is time to start discussing the “Global Gaming Threats” arising particularly out of the MetaVerse-Crypto Currency links.

(Comments welcome)

Naavi

Also check: Decentraland

Cyber Law College has conducted several training programs on PDPB 2019 in the last 2 years. Some of them are under the FDPPI Certificate program and some or programs conducted by Cyber Law College.

For all the paid programs, Cyber Law College had given an assurance that when the new modified version of the Bill is presented in the Parliament, a free bridging program would be conducted.

It is expected that during the first week of December, 2021, the new version of the PDPB 2019 would be presented in the Parliament and copy of the bill would be available.

Keeping up the promise Cyber Law College would be conducting a series of half day workshops in the second half of December to enable all the attendees of paid programs for PDPB 2019 and Module I of the FDPPI’s certified program and the DPO training Program of FDPPI to undergo the training.

The exact date and time would be announced later.

This offer would run upto January 15 2022.

All those who are interested in availing this offer may kindly register themselves by sending an e-mail to clc4india@gmail.com indicating the program they have attended.

Naavi

The Crypto war is expected to escalate further since it is the war between Black money and the Indian Government and it cannot subside easily without a fight.

The Crypto supporters are now attacking the Indian stock markets and drawing it down to indicate to the Government that there will be adverse consequences if Crypto ban is implemented.

At the same time an article in Economic Times today indicates that the IPL franchisees are also unhappy that their proposed link to the Crypto companies is sought to be derailed.

We already know that the Bollywood is deeply under the control of the drug mafia which require Bitcoins and Crypto currencies in circulation. Now the Cricket franchisees are all set to corrupt the cricketers by paying them off with bitcoins. This will be most useful in match fixing since money trail cannot be found and proved in a Court of law.

It would be dangerous if Bitcoin becomes the bind between drug trade in Bollywood and the match fixing and betting in Cricket. Sooner the law is passed, better it is for things to cool down.

This is the time for the Government to fasten its seatbelts and wait out for this attack to dissipate.

Stock markets will bounce back. Genuine investors have little to fear since there is likely to be a 90 day window for them to sell off their holdings. If the Indian market is weak, they can sell Bitcoins in the foreign market. They only have to account for the profits which all genuine investors can do. If people have invested their black money, no body can help them. Perhaps the tax authorities may only collect some penalty and not prosecute the genuine investors. Those who might have invested tens of crores of black money may have to face the music and they need no sympathy.

Naavi

The proposed “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” (Crypto Bill-2021) is expected to “Prohibit” private crypto currencies and also enable issue of a RBI controlled Crypto currency.

Knowing the power of corruption, we need to wait until the final act is notified to understand the real nature of the regulation. There could be several “loopholes” specifically introduced to protect the fraudulent intentions of the Crypto operators.

Just as we can have a law to regulate drug abuse saying that “LSD use is banned but can be used under prescription of a medical practitioner” which is sufficient for the drug industry to proliferate, it is possible to create “Exceptions” that effectively negate the “Prohibition”.

We hope that the Government has no such malicious intentions of cheating the honest citizens by a clever manipulation of the provisions in the Bill.

Leaving behind this doubt, let us now look forward to the developments that we may see in implementing the regulation as all honest citizens now understand.

Naavi

There are two important parts to the Bill. One is the “Prohibition of all Private Crypto Currencies” and the second is “Legal Empowerment of an official central bank controlled “Crypto INR” (CINR).

Listening to some TV debates yesterday, I understand that there is some confusion about what is a “Private Crypto Currency”.  What we need to understand is that “Private Crypto Currency” (PCC) refers to all the Bitcoin, Etherium, Dogecoin , etc where the block chain is controlled by a form of syndicate which is largely anonymous. Such currencies are completely out of control of any sovereign Government and the value is not backed by any sovereign guarantee. The value of such currency is only dependent on the public sentiment and the perceived shortage occurring because  of the scarcity factor.

PCC s also  includes Initial Coin offerings like  Libra where there may be an identifiable “Promoter”. It also includes the currencies like Linden used in “Secondlife.com” or similar other entities and internet games. These may carry some form of assurance from the owner of the website promoting the currency but not any form of sovereign guarantee. For example, the Lindens we may acquire in Secondlife.com may be convertible into dollars but if for some reason the exchange rate is unrealistically modified or exchange is suspended, it becomes a change of rules in the game and a contractual default.

“Non Private Crypto Currencies” refer to Crypto Currencies issued by sovereign Governments with sovereign backing. CINR would therefore be a sovereign Crypto Rupee backed by the Central Bank of India . Similarly CUSD would be a Crypto US Dollar and CEURO would be the Crypto Euro and CAUSD would be Crypto Australian dollar, CGBP the Crypto Great Britain Pound, etc.

All these “Non Private Crypto Currencies” may also be referred to as “Sovereign Crypto Currencies” or SCCs as distinguished from PCCs.

We understand that one of the objectives of the new Bill will be to enable the issue of an official crypto currency which in some circles are referred to as CBOD (Central Bank controlled official digital currency). We however prefer to call it a CINR since the term “Digital Currency” does not reflect the crypto nature and could be applied to any form of virtual currency including the dematerialized bank balance.

There is no Need for a new law for CINR

The first point that we need to note is that there is no need for a new law to enable RBI to issue a CINR. Currently RBI has the exclusive power to issue a “Currency”.

In terms of Section 22 of the Reserve Bank of India Act (1934),  Reserve Bank has the sole right to issue banknotes in India. Section 25 states that the design, form and material of bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by the Central Board of RBI.

Section 22 of RBI act states:

(1) The Bank shall have the sole right to issue bank notes in India, and may, for a period which shall be fixed by the Central Government on the recommendation of the Central Board, issue currency notes of the Government of India supplied to it by the Central Government, 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 Central Government] 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.

(2) On and from the date on which this Chapter comes into force the Central Government shall not issue any currency notes.

Section 25 of RBI Act states:

The design, form and material of bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by Central Board. 

Under Section 26 of the RBI Act,

“…every bank note shall be legal tender at any place in 4[India] in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government…. “

RBI Act also prescribes criminal punishments including imprisonment upto 3 years and fine.

Hence the sole right to issue any instrument which is used or intended to be used or advertised to be used as a “Legal Tender” is the sole right of the RBI.

If by calling Bitcoin as a “Currency”, the industry is mis-representing the public, the persons responsible can be punished under the RBI Act as well as IPC (For cheating).

The very name “Crypto Currency” indicates the nature of Bitcoin and other crypto currencies as meant to be  used as a “Currency” or a “Legal Tender” as an exchange of value. Hence it is not possible to consider a “Crypto Currency” as a “Crypto Asset not being a currency”.

Had the Crypto community maintained a consistent promotion since 2013 that “Bitcoin is a Crypto asset and not a currency” as was suggested by the undersigned, they would have been morally in a better state of mind today to defend that “Bitcoin” is a separate “Class of assets”. They chose to exploit the benefit of the tag as a “Currency” and hence have to face the liability arising therefrom.

Hence without a sovereign backing any instrument which can be directly or indirectly called a “Crypto Currency” is an offence under RBI Act 1934 with or without the new Bill.

Similarly, since Information Technology Act 2000 (ITA 2000) recognizes under Section 4 that

” Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is (a) rendered or made available in an electronic form; and (b) accessible so as to be usable for a subsequent reference”

The digitally printed electronic document including a CINR is recognized as if it is a digital form of a Bank Note.

However, under Section 1(4) of ITA 2000, certain types of documents are exempt from ITA 2000 and such document includes

“A Negotiable Instrument (Other than a cheque) as defined in  Section 13 of the Negotiable Instruments Act 1881 (26 of 1881)”

According to Section 31 of the RBI Act

“No person in India other than the Bank, or, as expressly authorized by this Act the Central Government shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person: Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person’s account with a banker, shroff or agent. 

And

Notwithstanding anything contained in the Negotiable In­struments Act, 1881, (26 of 1881) no person in India other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument.”

In view of the above provisions, a digital currency is not recognized under ITA 2000.

However, if the notification of Schedule 2 of ITA 2000 can be suitably amended (notification has to be placed before the Parliament subsequently for approval), it is possible that para (1) of the Schedule 2 of ITA 2000 can be amended to include digital currency as a recognized instrument.

Once this amendment to the notification is carried out, RBI will be free to issue the “Digital Currency” in any form. Crypto INR will therefore be a “Digital Bank Note” within the powers of RBI to issue and manage.

The security features and the procedures for issue, regulation of certification and even demonetization is entirely within the powers of RBI without the new Bill.

Crypto INR Structure

CINR is an electronic document which recognizes a certain value say equivalent to Rupee one. It contains some material information such as that it is issued by RBI with a certain serial number.

This information can be encrypted and endorsed by a set of “Private RBI Nodes” each of which represent official authority to issue and keep a record. While the printed Bank note is signed by the RBI Governor, the Crypto Bank note can be digitally signed by the Governor and further confirmed as an issue transaction by a few of the officials from the Note Issue department.

The issue process can be built on this small private block chain. There is no need for a public block chain and a public mining activity.

The CINR is unlikely to assume the imaginary values like the Bitcoin since the supply may be unlimited and there is no hiding from tax entities. At best it may carry a premium of convenience.

The RBI will save on the cost of “Printing of Notes” and the difficulty of protecting fake currency of high quality from enemy countries.

There is also a possibility that the flow of CINR can be tracked on how the currency moves in its life time.

This could be a privacy issue but can be handled separately with anonymization.

Further, it should be possible for the CINR to be equipped with a de-monetization switch so that if and when it is necessary to demonetize the CINR, it could be done at the central server avoiding all the difficulties we encountered in the physical currency demonetization.

The last issue that we need to take note that the security of the system now moves from the Currency printing press to the Central server that hosts the CINR block chain. Since the block chain ledger has an inherent duplication and secured by the highest level of encryption and decentralized location, it should be possible to secure the CINR block chain effectively.

The New Bill

Though it would have been possible to introduce CINR with the use of RBI Act read along with ITA 2000 and a modified Schedule 2 of ITA 2000, the Government has chosen to pass a separate law. This will perhaps provide greater clarity to those who never  understood ITA 2000 in the last 21 years and were blind to many of its provisions. Also some of the procedures regarding security and management of CINR can now be part of this new Act and will have a statutory force like the provisions on Bank note procedures in the RBI Act.

(Comments are welcome)

Reference Articles
India Today

We need to ban Bitcoins. But do we need a Digital Rupee?.. Naavi.org, February 2, 2021

E Rupee is a re-invention of Naavi’s DVIIS…Naavi.org, August 11, 2021

Black Money Control…. ZeMo-INR as an instrument of implementation. January 20, 2014

Bitcoin is Digital Black Money…Why?… Naavi.org, June 15, 2018

Bitcoin Regulation…. What the Government needs to do… May 24, 2017

Open Letter to Madam Nirmala Sitharaman…. Say No to experimentation…. It will be misused…  March 6, 2021