Indian govt's indecision over crypto is recipe for ponzi-like chaos

A riveting radio series on BBC by renowned journalist Jamie Bartlett, titled _The Missing Cryptoqueen_, is on its way to Hollywood. A movie by the name _Fake_ featuring Kate Winslet is being

planned on OneCoin, the cryptocurrency racket that resulted from its main promoter, a high-profile and once very visible Bulgarian, Dr Ruja Ignatova, suddenly disappearing from public view.

After convincing thousands to invest in the Ponzi scheme, blinding them through her larger than life shows and performances, including one at Wembley Stadium, she simply vanished and is yet

to be found. OneCoin first emerged on the scene in 2016 and positioned itself as a ‘BitCoin killer’. But, it had no blockchain at all and there was no word on how investments were to be

eventually converted into a fiat currency. When investors grew restless, Ruja disappeared. Bartlett’s nine-parter is a detailed enquiry and explanation of what happened as the scam unfolded.

THE INDIAN CONNECTION TO ONECOIN SCAM Interestingly, there is an Indian connection to this. The first arrests made in connection with OneCoin were in 2017 in Navi Mumbai, when 18 people

were held as they organised a seminar, peddling this ‘currency’ and using PM Modi’s video clips to exhort people to invest. In the latest twist, Ruja’s brother was picked up in the US and

may have agreed to become an approver. > The answer to the question of what India is intending to do with > cryptocurrencies has got more complicated since last year, when the > 

Prime Minister’s Twitter account was hacked and a message appeared > on it saying India had adopted bitcoin as legal tender and would > distribute it to all citizens. The tweet was

quickly deleted and the Prime Minister’s Office (PMO) said the account had been very briefly “compromised”. We have not heard again of what the inquiry report on such a crucial security

breach has concluded. The matter seems to have been buried quickly. The incident does seem to have left a mark on the progress of India’s policy on cryptocurrencies, which has become more

mysterious. The ‘pre-legislative process’ is, of course, not the norm now. But how far India has travelled from either consultation, deliberation or clarity in policy is clearly illustrated

in its position on cryptocurrencies. There is no principle or red line that is publicly put out that may allow for an informed assessment about which way Indian regulation may go on cryptos.

TAXED BUT NOT LEGAL The Finance Minister surprised analysts with a 30% tax on crypto earnings announced in the annual Budget without any clarity on their legal status. The tax has come into

force this month and the government revealed recently that it had already investigated eleven crypto exchanges for the evasion of the Goods and Services Tax (GST) worth Rs 81.54 crore. The

Finance Ministry claimed that “GST authorities have collected ₹95.86 crore so far in these cases, including interest and penalty on tax dues”. After having listed the cryptocurrency

legislation during the Budget and Monsoon sessions last year, there has been no word and no soliciting of views. On 11 December (incidentally, a day before his account got ‘compromised’) the

Prime Minister had said at the Democracy Summit with US President Joe Biden that “we must also jointly shape global norms for emerging technologies like social media and cryptocurrencies so

that they are used to empower democracy, not to undermine it”. The Reserve Bank of India (RBI) has reportedly been in favour of a complete ban, citing concerns about the ability of

cryptocurrency to take in people and eventually fool investors. 40 EXCHANGES, 10 CRORE INVESTORS The Union Government is to yet reveal its hand or intent. JB Mohapatra, the Chairman of the

Central Board of Direct Taxes (CBDT), announced after the annual Budget that it would be taxing cryptocurrencies, that this did not mean that they were legitimate instruments. In confusing

comments, he said: > “Taxation does not add or attach any legitimacy, any legality to > the transaction that has been affected for accounting for surplus or > deficit in a crypto 

trade. We as a department are not mandated to > question the legality of any business, any sector of the business, > any profession or any transaction.” But surely, there is enough of

a crypto presence in India for it to receive an official acknowledgement. Of about 40 exchanges, 10 are said to be significant, and the biggest one is said to have a turnover of Rs 34,000

crore. About 10 crore of the population is said to have already bet on these, as per figures put out by officials. The Indian government is not doing itself or its citizens any favours by

taxing cryptocurrency but not legitimising it. INDIA’S TROUBLING EXPERIENCE WITH CHIT FUNDS India has had a troubled past with get-rich-quick schemes. For example, chit-fund schemes, which

fall under the shadowy penumbra of legal and illegal, have ended up impoverishing thousands. An estimate puts the number of chit-fund scams so far to be around 350, with over ten crore

families hurt by them. > Two years ago, people from 17 states came together in Delhi to > register their protest against scamsters, often like in the case of > the Pearl Agrotech 

Corporation Limited (PACL), Saradha and Narada > having political patrons A decision was made by the Supreme Court in February 2016 to force PACL to use its land asset worth Rs 1.86 lakh

crores (according to SEBI) to pay compensation to victims, and a committee under the chairmanship of former Chief Justice Justice RM Lodha was constituted to pay the victims. But the matter

continues to cause grief and refunds take time, that is if they come through at all. The same fate cannot be allowed to befall those investing in cryptos in the false comfort that because

there is a ‘tax’, there is a governmental nod. As is well established in the OneCoin fraud documented in _The Missing Cryptoqueen_, the wooing of investors is incessant through new media and

old greed. The Union Government is not helping by prolonging the suspense and yet offering a tax announcement, which is being misinterpreted as a half nod to legality. Cryptic clues do not

add up to informed policies or decisions, especially on matters like currency and money. Abdication or dithering is not really an option. _(Seema Chishti is a writer and journalist based in

Delhi. Over her decades-long career, she’s been associated with organisations like_ _BBC_ _and_ _THE INDIAN EXPRESS. She tweets_ _@SEEMAY. This is an opinion article and the views expressed

above are the author’s own._ _THE QUINT_ _neither endorses nor is responsible for the same.)_ Published: 19 Apr 2022, 9:36 AM IST