India

India and Pakistan take Irresponsible Approach Toward Cryptocurrency Market

India and Pakistan Unwisely Take Hostile Stance Toward Cryptocurrencies

India and Pakistan, two countries which are both nuclear powers and were once under British rule, have had their share of problems and conflicts. Both nations vehemently accuse each other for wrongdoing and fight constantly over heavily disputed territory, Kashmir. However, that’s an entirely different topic from what I am about to discuss with you.

Due to the rise of the global cryptocurrency market, regulatory authorities have had their work cut out for them when it comes to regulating the trade and use of these blockchain-based currencies. Some progressive world leaders such as Switzerland’s government and the United States are beginning to embrace digital currencies and are also in the process of providing their citizens with a proper and safe regulatory environment to trade and invest in Bitcoin and other cryptocurrencies.

Backward Thinking and Irresponsible Attitude

Unfortunately, the governments of India and Pakistan have acted irresponsibly by not working cooperatively with local cryptocurrency traders and not taking adequate measures to educate their citizens about the vast potential of cryptocurrencies and blockchain, the technology that underpins these revolutionary new digital assets. 

While, in the past, many world leaders have said that Bitcoin and other cryptocurrencies are not legal tender, the reality is that a growing number of merchants have begun to accept digital currencies as a form of payment. For instance, large online retail company Overstock.com has been accepting Bitcoin as payment for a number of years. You can even purchase a package from Express VPN using Bitcoin. Notably, you can even pay for porn from Pornhub or Brazzers using Verge crypto-platform’s XVG.

Crypto and Blockchain Becoming Mainstream 

As Nasdaq gets set to launch a regulated crypto exchange, State Bank of Pakistan and the Reserve Bank of India (RBI) have instructed local banks  not to serve customers who are dealing in cryptocurrencies. This is in stark contrast to what US states like Arizona are doing. Arizona and other US states are willing to accept cryptocurrencies as payment for taxes. On the other hand, RBI and State Bank of Pakistan choose to remain ignorant by prohibiting crypto trading and any transactions related to them.

There are a number of reasons why Pakistani and Indian authorities have decided not to accept crypto transactions. One of the main reasons is that it takes time, money and effort to set up an environment that is appropriate and safe for people to use a new technology. Due to high levels of corruption and lack of accountability among almost all high-level government and bank officials, precious resources that should be channeled toward serving the deprived citizens of both countries are snatched up by the “elite” for personal use and gains.  

Indian Citizens Lash Back at RBI

Just like the citizens of South Korea fought back against an attempt by their authorities to ban crypto trading, Theblockchainstory platform in India has filed a petition against RBI in the nation’s Supreme Court. Notably, the Writ has been filed under Article 32 of the Indian Constitution, which aims to “provide a remedy for violation of fundamental rights.” Theblockchainstory founder and petitioner Satyam Tiwari asserts, citing Article 14 & 19 (1)(g) which serves to protect inalienable rights such as “Freedom to Trade and Business ” and “Right to Equality” in all matters, that the Impugned Circular put forth by the RBI fails to meet any objective.

Moreover, the petitioner states that the reserve bank has not provided sufficient proof or verifiable empirical data which would justify its hostile stance toward the crypto and blockchain ecosystem. Further, the petitioner has rightfully said that this move could potentially impede technological advancements and stifle innovation. The Writ filed by the petitioner is in response to an April 6th, 2018 statement by the RBI which instructed all financial institutions and merchants to refrain from engaging in transactions involving cryptocurrencies.  

Exact Words from India’s Central Bank

Here’s an excerpt from the official reserve bank orders:

“In view of the associated risks, it has been decided that with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies). Regulated entities which already provide such services shall exit the relationship within a specified time.”

There’s always the argument that the bank might have taken this decision to protect its citizens from fraudulent activities related to cryptocurrencies. There have recently been a growing number of incidents during which individuals have been a victim of a crypto-related scam. However, this is not the appropriate way to respond to such incidents.

Not the Right or Responsible Way to Respond

There’s a lot of money laundering and illicit activities that go on using fiat currency. So, does that mean we should stop using fiat money? Of course not. What responsible and competent governments do is create proper regulations and safeguards to ensure the safety and well-being of their citizens. And, this is exactly what India needs to do. 

In response to RBI’s negligent attitude, petitioner Tiwari remarked: 

“This step by Reserve Bank of India is an obstacle to innovation which will force businesses to move out of India.”

Tiwari’s statements are quite accurate considering crypto exchanges such as CoinSecure, BuyUcoin, and Zebpay have already looked toward moving business operations abroad where they might find a more friendly and progressive working environment.

Pakistan Follows India in Hostile Stance Toward Cryptocurrencies

Pakistan has followed in the footsteps of its Indian neighbor by attempting to restrict cryptocurrency transactions. State Bank of Pakistan (SBP) warned Pakistanis in early April (last month) against using cryptocurrencies such as Bitcoin and Pakcoin. The post stated that anyone found using cryptocurrencies to send money abroad would face legal action. Acting in a similar manner to the Indian central bank, the SBP ordered local financial institutions, payment service providers, and merchants to refrain from engaging with customers who deal in Bitcoin or other cryptocurrencies. 

The SBP further stated that cryptos are not considered “legal tender”; therefore, it cannot grant any authorization or license which would allow any business or individual to conduct cryptocurrency transactions. The Pakistani reserve bank issued the following statement:

“Virtual currencies/coins/tokens provide a high degree of anonymity and can be potentially used for facilitating illegal activities. Also due to the ambiguous nature of Virtual Currencies, no legal protection or recourse is available to any individual.”

SBP Has Raised Some Valid Points

Admittedly, the SBP has some valid reasons for not accepting cryptocurrencies. That being the crypto market is extremely volatile and failure to invest without proper research could lead to large financial losses. However, the more appropriate response to this would be to provide proper education and awareness regarding the responsible use of cryptocurrencies. Let’s not think of them as a way “to get rich quick”. Instead, let’s think of productive ways to use them and learn about them. 

Another point brought up by the SBP is that there have been a number of hacks of digital currency exchanges, which have led to huge financial losses for numerous investors. Sure, this is a valid concern, but it does not mean that we should stop transacting in cryptocurrencies. Rather, we should try to contribute toward learning about the technology and using all the necessary precautions to safeguard our crypto accounts.

2-Factor Authentication

Two-factor authentication (2FA) provides an additional layer of security to your online accounts. There’s the popular Google Authenticator that people can use to enable 2FA. So, in addition to providing your password upon log in, you also need to provide a randomly generated 6 digit code before from Google Authenticator in order to be able to access your email. Similarly, peer-to-peer cryptocurrency exchange LocalBitcoins.com uses 2FA (both mobile based and paper-based) to verify login credentials. 

2FA is optional on LocalBitcoins, but this is where YOU come in. People need to take responsibility for their personal safety as well. Being careful about your online habits and how to protect your private information should be everyone’s top priority. Let’s not rely or depend on others for our own personal safety. Let’s all learn to be more independent and self-sufficient.