Home / Money / Personal Finance /  Know your rights before investing in digital assets

To understand the rights that are afforded to you when you are dealing with, or transacting in, cryptocurrencies, you need to first understand how this ecosystem works. Coming down to the basics, cryptocurrencies are an unregulated asset, typically exchanged or transacted on cryptocurrency exchange platforms. These platforms provide investment options, akin to features available for the conventional share trading setup that investors are familiar with. Cryptocurrencies and non-fungible tokens (NFTs), among other virtual digital assets (VDAs), are typically stored on digital wallets. These wallets could be linked to a particular exchange or be offered by any other service provider, which is neither an exchange itself, nor is the underlying technology on which the VDA is based upon.

Amid all the cautionary advice issued by the government in view of the risks associated with the technology, the end users must become familiar with what they can expect of these service providers and online platforms.

While there is no law which governs the ecosystem, an investor is not left without any redressal at all. Investors can still rely on the rights that are afforded under the information technology laws: (i) to have grievances redressed by way of an established mechanism made available by the provider; (ii) to expect their data to be safe and secure in the online environment and transactions; (iii) to be able to have recourse against cybercrimes which range anywhere between fraud and theft of finances to identify theft and any phishing related concerns (this will also find resolutions under criminal laws, by way of the Indian Penal Code); (iv) to be able to make changes to their profile registration, including updation and correction of their banking information, and other personal information.

Flowing from the obligations under the applicable data privacy laws, users are permitted to withdraw their consent to the continual processing of their data; this can enable the user to terminate their relationship with a crypto platform and seek for deletion of their profiles.

A consumer in India also possesses the rights to: (i) be heard; (ii) redress; (iii) safety; (iv) be informed; (v) consumer education, across all sectors. Additionally, under the consumer laws, users must be provided with all information necessary to arrive at a well-reasoned decision with respect to the offerings of the platform. Drawing a leaf from the US Securities Exchange Commission and Sebi, the Central Consumer Protection Authority has also recently issued separate guidelines for monitoring and regulation of advertisements. This would also apply to the platforms involved in VDA transactions.

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In addition to the statutory rights discussed herein, users are further governed by the specific terms and conditions of the cryptocurrency platform, digital wallets, so engaged by the user for cryptocurrency related transactions. The terms and conditions of each platform will be dependent on the products and services offered, and shall be peculiar to the service provider, without having to be necessarily comparable with another platform or service provider. Certain platforms such as Coinbase, CoinSwitch, Binance and CoinDCX have taken the pains to educate their users and enable the consumer to beware of the associated perks, and shortcomings of the service and product offerings. Users are urged to review the terms and conditions of any product/ services available online, to understand the risks, benefits and limitations of contracting with such agencies.

It is important here to understand that since this market is unregulated, reliance upon laws is derived from a milieu of information technology (intermediary, data privacy and protection) laws, consumer protection laws, contractual obligations, and the penal code.

As there is a direct contract between the platform and the end user, some of the rights which are afforded to you as a user is at the exclusive discretion of the service provider, the particular platform, in addition to what is mandated under the law.

Abhishek Malhotra is managing partner at TMT Law Practice.

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