Indian Law Commission Sees Cryptocurrencies as an “Electronic Means of Payment”

  • The law commission of India recently revealed it sees cryptocurrencies as an "electronic means of payment."
  • This in a report on sports betting, an activity that has been banned in the country, leading to an underground economy.
  • Some analysts draw parallels between the sports betting ban and the central bank's banking embargo on cryptos.

The law commission of India, an organization established by the country’s government, recently recognized cryptocurrencies like bitcoin as an “electronic means of payment,” according to a recently released report.

The report, titled “Legal Framework: Gambling and Sports Betting including Cricket in India,” saw the organization, ordered by the Reserve Bank of India (RBI), the country’s central bank, to examine whether sports betting should be legalized, reads:

Gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, virtual currencies (VC, or cryptocurrency), etc.

Law Commission of India

India’s sports betting scene has been embroiled in controversy. Reports suggest an attempt to criminalize it didn’t act as a deterrent, and that a blanket ban only led to an underground economy, in which bad actors reigned.

In 2013, sports betting was thrown into turmoil in the country, as the country’s most-watched sport event, the Indian Premier League (IPL) cricket tournament, reportedly had its matches fixed. This led to a series of high-profile arrests, including those of athletes, for collusion with bookies.

Speaking to Quartz Nischal Shetty, the founder and CEO of a cryptocurrency exchange, revealed this is the first time a “body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction.”

Tusha Joshi, an associate at legal firm TRA Law, which represents several crypto exchanges, stated:

The law commission recommends that regulating gambling is preferable to an outright ban. This is the same argument we are making in context of cryptocurrencies.

Tusha Joshi

The law commission noted that cryptocurrencies have made gambling easier, since they make transactions harder to trace. Regulating cryptocurrencies could be positive for Indian crypto enthusiasts, as the Reserve Bank of India earlier this year ordered local financial institutions to bring their banking relationships with cryptocurrency-related businesses to an end.

In July, the country’s Supreme Court backed its decision, effectively banning crypto activity. A petition to reverse the move got over 22,000 signatures, but the ban went forward, dealing a big blow to the country’s crypto scene.

Despite these developments, as CryptoGlobe covered, the Reserve Bank of India recently pushed the Supreme Court for regulations on cryptocurrencies. It reasoned these are necessary as cryptocurrencies encourage “illegal transactions.”

The RBI’s moves against cryptocurrencies have rallied up the crypto community, to the point eccentric cybersecurity pioneer John McAfee asked it to “stand together and act” against the central bank.

OneCoin Denies Being a ‘Hybrid Ponzi-Pyramid Scheme’

The controversial OneCoin organization has recently responded to the Central Bank of Samoa, claiming it isn’t a “hybrid ponzi-pyramid scheme” as it doesn’t fir the definition of these schemes, and that it is a centralized, closed cryptocurrency.

According to the Samoa Observer, the Central Bank of Samoa claimed OneCoin is a “hybrid ponzi-pyramid scheme” that “laundered money through New Zealand to Samoa.” It also claimed the organization was targeting local residents through churches.

The organization, widely believed to be running a pyramid scheme using the cryptocurrency space, sent a statement to the Observer defending itself, claiming it’s neither a pyramid nor a Ponzi scheme. It’s worth noting individuals associated with OneCoin have been arrested and charged in various countries, including China and India.

In its response, OneCoin argued that Ponzi schemes see the revenue of old investors be “generated through the investment of new investors,” and that it doesn’t require its agents, known as Independent Marketing Associates (IMAs), to recruit others in order to earn bonuses.

Its defense revolves around IMAs not being “obliged to incur any additional expenses or recruit a new IMA,” and that they are rewarded for the “value of [their] sales,” not for recruiting new agents.

The organization added pyramid scheme regulations are these for “consumer protection,” and that its IMAs aren’t consumers. This, as when they join the organization they sign a contract classifying them as “self-employed business owners.”

The users which are part of the OneLife Network are NOT consumers. They are IMAs, meaning they are self-employed business owners.

As CoinDesk notes, OneCoin argues it isn’t a pyramid scheme because its agents aren’t seen as consumers and, as such, it can’t be classified under a dictionary definition of a pyramid scheme, and doesn’t force its IMAs to recruit new agents, although they’re incentivized to do so.

OneCoin, instead, argue it is a “centralized, closed cryptocurrency” with strict anti-money laundering (AML) and know-your-customer (KYC) rules, which make it “much more compliant than decentralized [cryptocurrencies].”

As reported, OneCoin’s leaders Ruja Ignatova and Konstantin Ignatov were recently indicted by the U.S. Attorney for the Southern District of New York (SDNY) on charges of wire fraud, securities fraud, and money laundering. Konstantin was arrested in March of this year.

Moreover, earlier this month former OneCoin investor Christine Grablis filed a lawsuit against the organization’s promoters, with Grablis’ attorney claiming OneCoin’s founders created a multi-billion dollar ‘cryptocurrency’ company based completely on lies and deceit.”