Laws about Bitcoin are in a gray area today across the world.I studied documents from the Reserve Bank of India’s public repository surrounding Virtual currencies and prepaid solutions.I happened to study two documents about Prepaid Payment and Foreign Exchange Management Rules, 2000.Why research Prepaid Payment rules?A person may come across the need to purchase them through Fiat Currencies (INR, USD, GBP, etc).Purchasing any e-currency and loading to an eWallet is regulated by the RBI.Although Bitcoin is in no way related to this, I wanted to see how close I could get to any laws that could present a roadblock.Is Bitcoin Regulated in India?The RBI regulation on Prepaid Payment Instruments in India defines a lot of areas.After understanding the documents of RBI’s guidelines and Rules, this is where I could find the only roadblock based on regulation.3.2 Only banks which have been permitted to provide Mobile Banking Transactions by the Reserve Bank of India shall be permitted to launch mobile based prepaid payment instruments (mobile wallets & mobile accounts).” In order to enter into the market; fiat is needed to purchase Bitcoin.

Fiat will fade away as more people adopt Bitcoin.Until that frictionless free flow between consumers and merchants is made possible, this is a problem area for Bitcoins entry into India.It can be overcome through: If we keep fiat out of the system, then Bitcoin is unregulated in India.ej fagan bitcoinI spent some time on the Foreign Exchange Management Act, but it is entirely out of the scope of Bitcoin.bitcoin armory (etotheipi)As it is a decentralized currency, it can be considered to be a domestic currency since it is being mined in India.bitcoin feb 2014This leaves it out of the scope of Foreign Exchange.bitcoin first

Even if, IP’s can be tracked when Bitcoin is used for Foreign Exchange, they can be easily anonymized through the Tor Wallet.Since it is a true P2P (Peer to Peer/ Person to Person) currency, it is impossible to regulate in a population using Bitcoin as a token of value to trade.bitcoins gejatThe logistics to monitor a mass population is not feasable.bitcoin gnomePlease do read the Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India and Foreign Exchange Management (Current Account Transactions) Rules, 2000.They will help to understand more about the Banking Regulations in India and help solve some problems.India’s closed currency banking system is rival to none.The banks have maintained a lot of public faith in urban areas and have reached a lot of people in this 1.5B population landscape.India has an unbanked population of 41% according to RBI statistics I would like to reach out to the world of regulators and lawmakers to release a statement on Bitcoin.

Can the Reserve Bank of India issue a statement on Bitcoin?Please forward this till someone takes notice and moves Bitcoin along in a positive path.Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India Foreign Exchange Management (Current Account Transactions) Rules, 2000.Ignoring the Unbanked: Reserve Bank of India’s Mobile Payments Guidelines – A study by Radix ConsultancyThe UK government has shown its intention to regulate bitcoin and other digital currencies, drawing them into the realms of financial regulation applied to banks and other financial services.But bitcoin is not a bank or a financial company based in the City.How would regulation apply to something that exists in the cloud?George Osborne’s announcement in his pre-election budget contained three measures.First, to apply anti-money laundering regulation to digital currency exchanges, for which formal consultation will begin soon after the election.Second, for the British Standards Institution and the digital currency industry to work together to develop voluntary standards for consumer protection.

And third, £10m funding for the Research Councils, Alan Turing Institute and Digital Catapult to partner with industry to research the opportunities and challenges posed by digital currencies.The government faces the familiar problem of needing to provide a suitable environment for innovation to flourish, while also ensuring that firms working in the same industry performing similar functions are regulated in the same way.All of this needs to be done in such a way as to protect the consumer and, in this case, perhaps the wider financial system itself.Heavy-handed regulation risks stifling innovation and driving away potential digital currency-based businesses.After all, as a truly global currency that exists in the cloud, the physical location of a digital currency-based business is irrelevant.Too little regulation may leave digital currencies vulnerable to criminality – and the effect of this criminality on consumers and the economy.The digital currency industry already faces problems that include theft from digital currency exchanges, malware and attacks on third-party websites, as well as the potential to aid money laundering.

For example, within a week of Osborne’s announcement, another bitcoin exchange, Paybase, ceased allowing withdrawals and its administrator disappeared.The regulation of digital currency is important in order to mitigate these sorts of risks and prevent abuse that destroys trust in the system.It is essential if digital currencies are to develop a major role in the UK economy.However their nature presents serious regulatory challenges: there is no central issuer, no control over supply and demand and no central organisation to impose regulatory requirements upon.This might suggest the very idea of bringing them within the regulator’s embrace is futile.However, the aspect in which digital currencies are accepted as payment for goods and services seems a point at which to apply anti-financial crime measures – for example, customer due diligence measures when high-value goods are purchased using digital currency.In this sense they come under the same regulatory umbrella as cash, as defined in the Money Laundering Regulations 2007.

A further approach favoured by the government is to focus on the digital exchange services – the sites where digital currencies are exchanged for real-world dollars, pounds or euros.Two key anti-money laundering initiatives are customer due diligence and suspicious activity reporting.Customer due diligence – where banks or financial services must require proof of their customer’s identity – is one of the most significant aspects of anti-money laundering regulation.Without this there is no paper trail leading back to the criminal, but this cannot be applied in all instances as it would be too much of a burden.So it will have to be applied where there is most risk, an approach that reflects the different aspects that warrant regulation, but which treats all companies within the sector equally by creating a level playing field.Suspicious activity reports would be more difficult to implement, not least because at present there is limited legitimate use of digital currencies.A main use for digital cryptocurrencies has been for purchasing illegal goods and services from markets in the dark net, such as Silk Road.

This makes it difficult for an exchange to identify a “suspicious transaction”.Consumer protection measures could be brought in by the introduction of a US-style licensing system for digital currency exchanges.A side effect of this approach is that it may simply drive businesses overseas to evade regulation.Ultimately, digital currencies are not restricted by national borders and, in that sense, it is not important from where they operate.Another challenge is how to apply sanctions in the event regulations are breached.Sanctions are important to deter crime, but without the information gained from applying measures such as customer due diligence there may not be sufficient information to trace someone to punish.One of the key characteristics of bitcoin is the pseudonymity it affords users.But if your bitcoin wallet address is ever linked to your identity then every transaction will be linked to you – although there are methods such as bitcoin mixing services that can completely disguise the trail.