What cricket-match fixing has to do with India’s cryptocurrency ban
The courts are getting the last word on 11 September, but other agencies have had to form their own opinions.
Cryptocurrency took off in India like everywhere else, but was soon quashed by a "ring fencing" from the Reserve Bank of India.
Unlike an outright ban, the "ring fencing" is intended to push cryptocurrencies out of the mainstream rather than ban them outright by barring cryptocurrency exchanges from banking services and eliminating most fiat-to-crypto connections.
Functionally, it's a lot like a ban though. It has so far been contested all the way up to India's Supreme Court and right now debates are still ongoing, though the ring fencing remains.
Now in the latest update, the courts have said they'll be giving a final judgment on 11 September once they've heard more. Abhishek G, co-founder and CEO of India's ThroughBit cryptocurrency exchange, who was present at the hearing, noted that the court seemed receptive to pro-crypto arguments.
It's not possible to say which way it will go for sure, but the general tone might have been optimistic, and there are plenty of signs that the "ban" is just temporary until cryptocurrencies can be re-classified and regulated more effectively. For its part, the Reserve Bank of India (RBI) is continuing its push against cryptocurrency.
A new sign also recently cropped up in the form of a vaguely confusing set of recommendations around gambling from the Law Commission of India, the use of cryptocurrencies in betting and the problem of match fixing.
Where gambling, match fixing and crypto meet
The gambling circular is potentially significant to the future of cryptocurrency in India, says Mohammed Danish, an advocate practising at the High Court of Delhi, because it specifically does the following:
- Incorrectly claims that the RBI banned the use of virtual currencies in India.
- Explicitly refers to cryptocurrency as a payment method on par with others.
- Notes the impossibility of trying to regulate something that's illegal, and recommends a "legalise and control" approach for gambling – with clear parallels to the current debate around cryptocurrency.
The context of the report is that India has recently been rocked by match-fixing convictions, with various players and officials in India's Premier League, cricket and other sports being found guilty. In a subsequent investigation of how to crackdown on this problem, many agencies pointed at strict laws around gambling and sports betting in India, which more or less criminalises it for most people.
The result is that legal gambling in India is just the tip of the iceberg, and that the majority of money involved is flowing through it illegally. As such, it's largely controlled by organised crime groups who can afford to "invest" in match fixing for higher returns without any real additional risk, whose bets aren't being officially recorded and who can use the area as a very effective money laundering tool.
The new circular notes that many agencies are saying it's almost impossible to crackdown on match fixing as long as gambling itself is largely illegal. The solution, it suggests, might be to relax restrictions around betting and start regulating the space more closely.
Regulating, not criminalising
This has obvious parallels to the cryptocurrency situation, and the RBI might note that banning cryptocurrency innately means leaving it unregulated.
It's often said that cryptocurrencies are the perfect tool for illegal purchases and money laundering – and they are. There's not a lot to be done about that though, and now the genie's out of the bottle. If a country tries banning crypto outright, then the most dire predictions just become self-fulfilling prophecies.
Crypto on par with currency
In its recommendations, the same report also notes that effective regulations will have to start encompassing cryptocurrencies for the above reasons. If you're trying to crack down on crime, then ignoring cryptocurrency as a payment method just means leaving a gaping loophole.
This conflicts with the RBI stance that cryptocurrency is not money, will never be money and can never be money.
So far the debate has been centred on the RBI trying to ban cryptocurrency, the exchanges and other companies fighting for the freedom of properly regulated cryptocurrency and the courts deciding which way it goes. So one implication of the gambling and match-fixing recommendations is that the courts might be hearing some additional compelling arguments against a crypto ban from other government agencies as well as from the exchanges.
"It is surprising yet good news for Crypto Community in India that Law Commission has treated “Crypto Currencies” alike with other recognized forms such as Credit Cards, Debit Cards and Net Banking," Danish says.
He also points out that this kind of "crypto as a payment" argument from the Law Commission is a sizable step ahead of the public discourse and might suggest that insiders are expecting the crypto "ban" to be reversed.
"[does] the Law Commission's recommendation at this stage indicate its insider knowledge on the prospective treatment of Crypto currency by the Government?"
The crypto ban that wasn't
At the same time, the gambling report also falsely claims that the RBI banned the use of cryptocurrency, specifically saying "The Reserve Bank of India by way of Circular dated 6th April outlawed the use of VC [virtual currency]."
Danish points out that this is just not correct. For the sake of brevity, the RBI's cryptocurrency ring fencing initiative is often just called a crypto ban, but it's factually completely different and the RBI has actually clarified that cryptocurrency use is legal. The exchanges can't get bank services from any RBI-regulated entity, but there's nothing illegal about crypto itself.
Danish notes that the incorrect statement is a bad look for the Law Commission, but also that it might pose some challenges if someone does want to argue that it's illegal or that it should be.
"In view of the aforesaid, now the question arises as to how the Law Commission can claim the use [of] Crypto Currency being outlawed by RBI when RBI itself has taken a contradictory stance on affidavit before Supreme Court?" Danish writes.
It also suggests that even in the world of India's highest legal authorities, the cryptocurrency situation is far from cut and dried. There's a lot of misinformation going around and the confusion might continue until 11 September, when the courts get the last word.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.
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