Best Presentation on Legality of Bitcoins in India given before Chartered Accountants by Prashant Mali. Widely circulated and most downloaded

1. Legality of Bitcoins /
Crypto Currency /Virtual Currency
in India
Keynote Session Delivered at
Jain Chartered Accountants Federation, Mumbai
Advocate Prashant Mali
MSc(Computer Science),LLM
Bombay High Court Lawyer & Author
CyberMahaGuru

2. Tracking the RBI
for BITCOIN
as a Currency

3. RBI has to Notify Currency
• The term currency is defined in section 2(h) of
the Foreign Exchange Management Act, 1999
(“FEMA”) in the following words:
• “currency” includes all currency notes, postal
notes, postal orders, money orders, cheques,
drafts, travellers cheques, letters of credit,
bills of exchange and promissory notes, credit
cards or such other similar instruments, as
may be notified by the Reserve Bank;

4. Tracking RBI on Bitcoin
• On December 24, 2013 – RBI Press Release
• "The creation, trading or usage of (virtual
currencies) 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,"

5. Tracking RBI on Bitcoin
On February 1, 2017, RBI Press Release
"The Reserve Bank of India advises that it has
not given any licence / authorisation to any
entity / company to operate such schemes or
deal with Bitcoin or any virtual currency. As
such, any user, holder, investor, trader, etc.
dealing with Virtual Currencies will be doing so
at their own risk,"

6. Tracking RBI on Bitcoin
• On December 5, 2017, RBI Said
• "Attention of members of public is drawn
cautioning users, holders and traders of
Virtual Currencies (VCs) including Bitcoins
regarding the potential economic, financial,
operational, legal, customer protection and
security related risks associated in dealing
with such VCs,”

7. What is Governments Position ?
November 30th 2017 Jaitley Said
"The government's position is clear,
we don't recognise this as legal
currency as of now,”

8. What is Governments Position ?
• on 1st Feb 2018:
The budget speech by the Finance Minister
"The Government does not consider virtual
currencies as legal tender or coin and will
take all measures to eliminate use of these
crypto-assets in financing illegitimate
activities or as part of the payment
system”

9. Income Tax Surveys
• December 13th 2017
• Income tax department carries out survey,
under section 133A of the Income Tax (I-T)
Act, is being conducted for "gathering
evidence for establishing the identity of
investors and traders, transaction undertaken
by them, identity of counterparties, related
bank accounts used, among others”

10. Bitcoin as a Commodity
• December 20th 2017
• Securities Exchange Board of India (Sebi)
said that if bitcoin is considered as a
commodity derivative then Sebi might
regulate it.
• In countries such as the US, the Sebi-
equivalent regulatory body is looking into
cryptocurrenices.

11. Risks No. 1
Digital currencies, being in
electronic format, are prone to
losses arising out of hacking,
loss of password etc.

12. Risk No. 2
• Lack of any authorized central
agency to regulate the
payments or to turn to for
redressal of grievances.

13. Risk No. 3
• No underlying of asset for VCs,
making the value a matter of
speculation.

14. Risk No. 4
• Exchanges are located in various
parts of the world, making the
law enforcement a tricky thing for
the multiple jurisdictions
available
• Also a LEA Issue

15. Risk No. 5
• Trading may subject the user to
illicit and illegal activities since
the VCs, can easily be used for
illegal activities anonymously.
• Terrorism Finance being one

16. Bitcoins as Goods
• Sale of Bitcoins would be governed by the Sale
of Goods Act, 1930
• Sale of goods means a contract whereby the
property in the goods is actually transferred
by the seller to the buyer and according to
section 4 of the Sale of Goods Act the transfer
of the property in the goods is for a price, i.e.,
for money consideration. As price is an
essential element of a contract of sale.
• Barter is Not Allowed so Bitcoins no Goods

17. What are BITCOINS?
• Bitcoins are essentially lines of
code which create the system of
transfer of Bitcoin currency from
one account to another.

18. Bitcoins as per Copyright Act
• The Indian Copyright Act defines the term
“computer programme” as “a set of instructions
expressed in words, codes, schemes or in any
other form, including a machine readable
medium, capable of causing a computer to
perform a particular task or achieve a particular
result”.
• Bitcoins would fall under the definition of the
term “computer programme”.

19. Police & Bitcoins in India
• Police doesn’t have SOP to confiscate any
Crypto currency / Bitcoins.
• Police doesn’t have any official wallet of home
department to store the crypto currency.
• If police manages above two
• Then Courts doesn’t have Wallets to store
crypto currency (Muddemaal) in order to pass
order in “Return of Property” matters.

20. Thank You
Prashant Mali [MSc.(Computer Science), LLB, LLM]
President - Cyber Law Consulting(Advocates & Attorneys)
Practicing Lawyer, Bombay High Court
Legal Counsel, Author, Speaker & Expert
Mob: +91-9821763157 | 022-26781818
Web : www.prashantmali.com
www.cyberlawconsulting.com
Email: cyberlawconsulting@gmail.com
facebook.com/cyberlawconsultant
Twitter : @CyberMahaGuru