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Govt needs to act swiftly to counter the threat posed by cryptocurrency use by terror groups: Ratan Sharda
During the on going pandemic the price of cryptocurrency in India has gone up by 53 per cent.
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The issue of cryptocurrency has been a raging topic among policymakers and experts worldwide. While it has been portrayed as a secure, fast and efficient transaction system, however, in the absence of a regulatory framework and a formalised approach to its use, cryptocurrency has for now become an important part of the darknet world.
To understand the threat that unregulated cryptocurrency poses and the ways to deal with it, we spoke to Ratan Sharda, noted Author, Editor, TV Panelist and Deepak Kapoor, Founder, BEGIN India Think Tank, here are some excerpts from the interview:
You have said many times that cryptocurrency is setting a very dangerous precedent, what is the big fear?
RS: If there is no proper control on cryptocurrency there can be a significant rise in terror funding and slush funds.
Cryptocurrency is much highly anonymous. During the on going pandemic the price of Cryptocurrency in India has gone up by 53 per cent. That means people are shifting to it to keep their investments safer and that is a risk in itself. Recently in the USA, they have broken a terror ring of three big jihadi networks. So it is a very integrated way of getting terror funds which is not easily transferable.
When we look at our preparedness to deal with this threat, where do we stand?
RS: RBI tried to ban cryptocurrency but it failed as the Supreme Court removed the ban. RBI is mulling over the ban since February 2020, however, it will not work like this. Just like you cannot ban porn, you cannot ban crypto currency.
So the ideal way is to have better control. I believe that we are about two years behind other countries. Even Ukraine is much ahead of us. So we need to move faster.
In your view, what should the government do to tackle this issue?
RS: Bitcoin.com has revealed that RBI had a meeting to legalise cryptocurrency. In one of the conventions, Dr Subramanian Swamy in 2019 suggested that we have to join this technology and not try to be isolated from it. He said that we should go for legalised Indian digital currency as other countries like South Korea, Australia and more are doing.
If small businesses start losing money in cryptocurrency they can never get it back as there is no control. I do not think that the government is uni-dimensional, it has got the entire finance ministry and the RBI and also various other agencies which should be looking after it.
I do not think that there is any directive from the government to go slow. We cannot blame it on the government but to the agencies that are supposed to handle it. We have no lack of skills in India but if we do not want to move it then nothing can move it.
DK: If you actually look at the origin of the cryptocurrency, it all started to get away with the government interventions and the economic and legal framework of the country. The technology is actually custom-built and cannot be hacked.
Globally everyone wants to make bitcoin into a private currency which will not be allowed because it will lead to the collapse of the economies. The most scary and challenging part is that I can have the entire economy of the US or the world converted into a small thing and carry it in my pocket or laptop.
How are other countries dealing with the issue of cryptocurrency?
RS: From a general view, I will mention a case where three Jihadi agencies have been caught in the trap of the US revenue department. Pakistan is the home of all these terror organisations. There are enough technical people who can create access to these various technologies. China obviously is the big daddy of cryptocurrency.
DK: Almost 68% of all Bitcoins originate in China on their servers. Today we are so scared of their apps that are taking our data away sitting somewhere else. Imagine if I have to invest in bitcoins then 68% of all those will still originate in China. They already have the data and I won’t be surprised if they have the passport or replica of whatever I do.
Will cryptocurrency remain stuck in the darknet, how can formal economic systems leverage it?
RS: Bitcoin is just one of the currencies and is an innovation. A lot of others have come up like you have currencies linked to Gold and to assets. So there are multiple possibilities. You cannot fight technology but have to use it to your best advantage. The day India went digital after demonetisation, look at the volume of transactions and the money that is coming into the system and the official channels. So if you get your cryptocurrency in line and as a legal currency where everything is tracked legally then you would have wonderful and fast transactions. But the problem is that we start putting regulations which start becoming ‘ifs’ and ‘buts’ and then nothing works.
DK: Everybody says that bitcoin should be made legal not realising that it is a private currency. You make it legal and you might put the entire economy of the country at stake. I also want to clear the misconception about the RBI ban that is often talked about. Bitcoin has not been made legal and I am saying it with full responsibility. RBI has simply put out a notification saying that bitcoin cannot be traded on any legal channels and the formal economy in the banks. Now that was the only ban and there was no ban on cryptocurrency.
I think Bitcoin should be traded like stock. That is the only legal status that it can get and it should get this status. This could possibly be the most secure technology cryptographically that we have ever seen in our lifetimes.
What are some of your recommendations to the government?
RS: One is to start creating a draft bill to control and administer the cryptocurrency, technology and the loopholes. Other is to work actively with the group which will try to figure out whether we should have our own cryptocurrency and also create a permanent monitoring body for it which will monitor the way these currencies are moving.
DK: We do not even have cryptocurrency crimes as a category of crimes registered in the country. Let us start acknowledging that first. I would want senior people from investigative and law enforcement agencies to first at least know about it and to know what is the world moving towards. We must have a body, but investing in bitcoins or any other currency is almost similar, so why does not SEBI just qualify it as a digital form of asset and go with it.