New Delhi: A plea to regulate the flow of bitcoin and ensure that this virtual currency be made accountable to the exchequer led the Supreme Court on Tuesday to seek a response from the centre.
A bench of Chief Justice Dipak Misra and justices A.M. Khanwilkar and D.Y. Chandrachud issued notice to the ministries of finance, law and justice, information technology, market regulator Sebi and the RBI, on the plea which also sought setting up of a panel to frame a mechanism to regulate the flow of bitcoin. Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. It was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system.
It is reportedly the first decentralized digital currency where peer-to-peer transactions take place without any intermediary. The plea, filed through advocate P.N. Razdan, also sought responses from the income-tax department and the Enforcement Directorate. Petitioner advocate Dwaipayan Bhowmick, in his plea, has said that the money used to buy bitcoin from foreign locations is completely untraceable and may be used for trading and other financial activities directly from cryptocurrency accounts without any accountability.
“It is submitted that certain countries have made bitcoin (crypto money) subject to their respective tax regimes, while a few other countries have designated it as a commodity, thereby making bitcoin subject to government regulation and accountable to the exchequer, but no such mechanism exists in India till date," it said.
The plea claimed that despite the RBI’s call for caution to people against the use of virtual currencies, domestic bitcoin exchange have been adding over 2,500 users a day and has reached five lakh downloads. The petition also said that the bitcoin was not tied to any bank or government and allowed the users to spend money anonymously.
“The coins are created by users who ‘mine’ them by lending computing power to verify other users’ transactions. They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with US dollars and other currencies," the plea said. The prevailing rate of exchange of one bitcoin in India is almost Rs4.3 lakh, as per information available on the internet.