India’s law reform committee accepts cryptocurrency as a valid mode of payment

Are we ready?
Are we ready?
Image: AP Photo/Gillian Flaccus
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India’s embattled cryptocurrency ecosystem may have just got a lifeline from another contentious debate: whether or not to legalise sports betting in the country.

The law commission of India, which has been studying the feasibility of sports gambling, has clubbed virtual currency with other legally accepted modes of payments. These methods used for settling online transactions can also be used for betting on sports if and when made legal, it said.

“Gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, virtual currencies (VC, or cryptocurrency), etc.,” the commission had recommended in its report submitted to the supreme court of India earlier this month (pdf).

The law commission is an executive advisory body established by the government and was asked by the apex court in July 2016 to examine if betting ought to be legalised in India.

“It is the first time that a body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction,” Nischal Shetty, founder and CEO of virtual currency exchange WazirX, told Quartz. “Therefore, it is a very positive sign, especially considering the report has come out after a lot of deliberation.”

The cricket connection

Sports betting itself has been debated in the country for years, given that criminalising it hasn’t acted as a deterrent. A blanket ban on gambling has only aided nefarious activities and the underground economy.

The debate surrounding sports betting intensified with the 2013 match-fixing scandal associated with the Indian Premier League (IPL) cricket tournament, the country’s most-watched sport event. In the wake of the scandal, several high-profile arrests, including those of cricketers S Sreesanth, Ajit Chandila, and Ankeet Chavan, were made in connection with illegal betting and collusion with bookies.

That’s when the supreme court stepped in and handed the law commission its task.

The commission’s mention of cryptocurrencies along with other recognised electronic modes carries added weight since it has been made in the recommendation section of its report, said, Mohammed Danish a Delhi high court advocate and a regulatory expert at Crypto Kanoon, a platform engaged in regulatory analysis and raising legal awareness about digital currencies in India.

“The law commission recommends that regulating gambling is preferable to an outright ban. This is the same argument we are making in context of cryptocurrencies,” said Tuhina Joshi, an associate at legal firm TRA Law, which represents several exchanges.

And one way of regulating is to keep track of funds. The commission has noted that cryptocurrencies have anyway made online gambling easier since the transactions are difficult to trace.

Overall, the development will cheer an ecosystem under severe duress following the Reserve Bank of India’s (RBI) crackdown. In April, the banking regulator ordered all lenders to wind down accounts of cryptocurrency exchanges and traders by the first week of July. In response, the bourses dragged it to the supreme court. The final hearing in the case has now been set for Sept. 11.