Tuesday, December 24, 2013

RBI Says Use Of Bitcoins In India Is Legally Risky

The much awaited public advisory by the Reserve Bank of India (RBI) regarding the legality of Bitcoins in India has been finally released. As per the press release, RBI cautioned users of virtual currencies against risks of use of Bitcoins in India. The advisory of RBI is in conformity with the views expressed by Perry4Law so far.

RBI has warned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.

According to RBI the creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users.

RBI also observed that there have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.

In other words, RBI has said that Bitcoins users and stakeholders are exposing themselves to a wide variety of risks, including the legal risks, while dealing in Bitcoins.

According to Praveen Dalal, leading techno legal expert of Asia and managing partner of ICT law firm Perry4Law, “The dealing in Bitcoins in India is still A “Grey Area” and it is not safe to consider it “Strictly Legal”. Till the time Indian Government or other Regulatory Authorities of India make use and dealing of Bitcoins Legal in India, the use of the same in India is at the own “Legal Risk” of concerned person or Institution”.

It is legally wrong to assume that dealings in Bitcoins in India if strictly legal as individuals and companies have to take care of the cyber law due diligence and Internet intermediary rules compliances. For instance, a platform selling and purchasing or trading in Bitcoins must not only comply with the provisions of Information Technology Act, 2000 but also with laws applicable to online trading and income tax.

The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations. The net result of the advisory by RBI is that it has made the position of Bitcoins in India legally risky i.e. unless laws of India are duly complied with, dealings of Bitcoins in India could be punishable under Indian laws.

Monday, December 16, 2013

The Jan Lokpal Bill Is Testing The Legitimacy Of Indian Parliament- Praveen Dalal

No time the legitimacy of Indian Parliament was questioned so much as in the present times. Illegal and unconstitutional projects like Aadhaar are operating without any legal framework and essential laws like Lokpal Bill are still pending enactment. Even the Supreme Court of India has held that Aadhaar card cannot be made compulsory for availing public services in India. But the defective policies of Indian government are still forcing such projects without analysing their long term consequences.

Now legal experts like Praveen Dalal have expressed that Parliament to Retain Its Respect and Legitimacy Must Pass Lokpal and Lokayuktas Act, 2011 today. He also believes that the proposed Lokpal Law must also be supported by a Whistleblowers Protection Law of India.

It is a “Do or Die” situation for both Congress and BJP and they cannot afford to be “Indifferent” any more. Congress and BJP have to show their commitment towards people of India by passing the Lokpal and Lokayuktas Act, 2011 in the Rajya Sabha. Otherwise, the Respect and Legitimacy for Parliament of India and Political Parties like Congress and BJP is in “Real Danger”, opines Dalal.

This sad situation has not arisen on a single day but due to decades of indifference on the part of Indian government and Indian Parliament. Not only this, the very purpose of Parliament of India is in question. What is the Purpose and Use of a Parliament if it cannot pass appropriate and required Laws? Why a tragedy is always needed to wake up Indian Parliament? Do we have Separation of Powers in India any more? Is Indian Government really interested in making CBI Autonomous and Independent?

Anna Hazare is already on fast to get the Jan Lokpal bill passed and his health condition is deteriorating day by day. Indian Parliament cannot afford to postpone the proposed Jan Lokpal bill anymore as people of India are not only angry but their patience is also wearing out.

Parliament Must Pass Lokpal And Lokayuktas Act, 2011 Tomorrow To Retain Its Respect And Legitimacy

This is the Guest Column by Praveen Dalal, Managing Partner of Law Firm Perry4Law and the founder of exclusive Centre for the Protection of Civil Liberties in Cyberspace. In this article he is sharing his views about the proposed Lokpal Bill. The views and opinion given by him are his personal opinion and not that of this platform or Perry4Law.

The Lokpal and Lokayuktas Act 2011 as Passed by Lok Sabha was the first step in the direction of bringing Transparency, Fairness and Lack of Corruption in Government dealings. However, the proposed Law could not see the light of the day till December 2013. Now veteran Leader Anna Hazare has once again raised the issue and he is on fast at the time of writing this article.

Meanwhile many Activists and Social Workers have come to the support of Anna and there is tremendous pressure upon Indian Government and Parliament of India to pass the proposed Law as soon as possible.

I believe that Parliament Must Pass Lokpal and Lokayuktas Act, 2011 tomorrow to Retain Its Respect and Legitimacy. I also believe that the proposed Lokpal Law must also be supported by a Whistleblowers Protection Law of India.

Political Parties have already seen the Power of Vote whose benefit was derived by a new party named Aam Aadmi Party. Now every issue is a “Politically Sensitive Issue” and no Political Party can “Afford to Offend Public Sentiments” regarding Lokpal Law.

Not only this, the very purpose of Parliament of India is in question. What is the Purpose and Use of a Parliament if it cannot pass appropriate and required Laws? Why a tragedy is always needed to wake up Indian Parliament? Do we have Separation of Powers in India any more? Is Indian Government really interested in making CBI Autonomous and Independent?

These are pertinent and controversial questions that need to be answered immediately. The Anti National Steps by Congress Government and their support by Political Party BJP have forced People of India to vote in favour of “Alternative Parties” like Aam Aadmi Party.                                                             

If Congress and BJP are smart enough they must understand the mood of People of India and mend their ways and Policies accordingly. I sincerely wish that the proposed Lokpal and Lokayuktas Act 2011 would be passed by Rajya Sabha tomorrow. I also sincerely wish that Shri. Anna Hazare would break his fast tomorrow for the common good and larger benefits of all. Time has also come to form a National Political Party under his Leadership as we need Good People “Inside the Political System” that needs a Complete Overhaul from inside.

Thursday, December 12, 2013

Tata Teleservices Limited (TTL) And Airtel Are Violating IT Act 2000

What is common between foreign technology companies and websites and their Indian counterparts? The answer is non compliance with Indian laws especially the cyber law of India. Indian telecom companies like Tata Teleservices Limited and Airtel are openly flouting the  cyber law due diligence requirements of India and complaints against them have been filed at Department of Telecommunication (DoT) and Telecom Regulatory Authority of India (TRAI).

The proposed e-mail policy of India has been suggested to decrease the dependence upon foreign e-mail service providers. However, before we do that we must make our own house in order. If companies like Tata Teleservices Limited and Airtel openly disregard the laws of India what respect we can expect from foreign companies.

Indian government has been trying to force companies like Facebook, Google, etc to establish servers in India. Similarly, the Internet telephony and VOIP service providers must establish servers in India very soon. However, isn’t it partiality and adopting double standards on the part of Indian government by putting pressure upon foreign companies and leaving Indian companies untouched?

By not complying with the Information Technology (Intermediaries Guidelines) Rules, 2011 (PDF) companies like Tata Teleservices Limited and Airtel are actually committing cyber crimes and cyber contraventions. As per the Information Technology Act, 2000 both these companies and the defaulting officials are liable to be prosecuted. Even their telecom licences can be suspended/cancelled and fine be imposed by DoT.

When Tata Teleservices Limited and Airtel are least bothered about Indian laws we can never expect compliance from foreign companies. Indian government in general and DoT in particular must take punitive and stringent action against Tata Teleservices Limited and Airtel to set an example before the whole world. Otherwise, we can keep on lamenting about non compliance of Indian laws by national and international companies.

Wednesday, December 4, 2013

Illegal Use Of Bitcoins Increasing And RBI And Indian Government Are Sleeping

The virtual currency known as Bitcoins is increasingly being used in India that also in an unregulated and illegal manner. Although laws and regulations are there that prohibits the use of Bitcoins in India in their present form yet individuals, companies and institutions are openly using the same with great disregard to Indian laws.

Thailand has recently banned use and dealing of Bitcoins in its jurisdictions. According to legal experts, Bitcoins may be specifically regulated in India as well very soon. While the trading of Bitcoins has been suspended in Thailand due to Bank of Thailand advisement (PDF) yet the reserve Bank of India (RBI) is not fulfilling its statutory duties in this regard. As a result Bitcoins are used in India for multiple purposes including conducting medical and surgical abortions in India.      

Many Bitcoins enthusiastics wonder whether use and dealing in Bitcoins legal or illegal in India?  There is no straight forward answer to this question but the legality of Bitcoin in India is in doubts.

According to Praveen Dalal, managing partner of ICT law firm Perry4Law and leading techno legal expert of Asia, the Information Technology Act, 2000 clearly puts Internet Intermediary under Legal Obligations to observe Cyber Law Due Diligence in India and to meet Internet Intermediary Compliance Requirements.

Some Regulatory Guidance regarding Bitcoins can be obtained from the Indian Virtual Currency Schemes issued by RBI but Regulatory Authorities like RBI, Medical Council of India, etc must clearly specify the use and manner of use of digital currencies like Bitcoins for various purposes. Bitcoins, their functionality and legality of use in India is still a “Grey Area” till then, informs Dalal.

Those companies and websites that are accepting Bitcoins in exchange of goods and services are doing it in an illegal manner and they can be prosecuted and punished. It is always better to observe cyber law due diligence before engaging with Bitcoins in India in any manner whatsoever.