An In-depth Analysis by CREBACO of the Steering Committee Report and Cryptocurrency Draft Bill for Regulation of Bitcoin Issued by the Ministry of Finance - India

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Analysis of the Steering Committee Report
The few points which CREBACO observed on the steering committee report are mentioned below:
Initially, the report talks about a broader fintech landscape, which mentions technologies such as mobile payments, investment advisory, insurance aggregators, peer-to-peer lending and cryptography. This can be inferred as the report, recognizing the existence of cryptocurrency in the global financial landscape, due to bitcoin's global popularity and raising awareness and adoption. The report then moves to encryption and cryptography, and signifies the importance of them in security. It brings confidentiality, privacy, non-repudiation and integrity. It also describes the use of cryptography in Blockchain technology which helps it to secure information and protect identities. The report talks about how Society for Worldwide Interbank Financial Telecommunication (SWIFT) has entered into Blockchain technology to speed up the payment settlements. The report mentions about Blockchain and distributed ledgers, however from the comment on the fundamentals about them, it is vague and not being formulated properly. Even though the report talks about Blockchain that makes the transactions in virtual currencies like Bitcoin possible but at the same time it also talks about potential applications of Blockchain beyond the scope of cryptocurrencies. Report does not talk about centralized and decentralized feature of Blockchains in detail as the application may vary. For instance, one has a Blockchain with all servers under one organization's control, then it's a centralized Blockchain, as that organization owns the control over it. The report also talks about major fintech applications where Blockchain is being deployed including cross border payments and talks again about SWIFT and the settlement processes and not Bitcoin. It may be noted that even if Blockchain comes into payment settlement, there will still be Nostro and Vostro accounts where banks will further process the payment to the account holders. Blockchain will just eliminate the third party in interbank settlement. Looking at the size of transactions in today's financial ecosystem, we don't think that the transactions can be settled on the very same day. Implementing Blockchain in payment settlement does not make transactions peer-to-peer which must be understood. There should be a global interbank Blockchain, only then the feature may be applicable. The report does not comment on consensus-based validation of transactions which will allow any updation of transaction. The banks will not make the Blockchain open source and if they do, they will have to create reward tokens, otherwise nobody would mine it. The report then talks about digital currencies and tokens and how the ICO market performed in the past few years. It also talks about the top five cryptocurrencies by market capitalisation which included Bitcoin, Ethereum, Ripple, Bitcoin-Cash, etc as on 25th September, 2018. Report accepts that Initial Coin Offering (ICO) evolution is rising in the Global fintech landscape and is an innovative way of capital raising by fintech business. The issue of virtual coins has emerged as an alternative to traditional forms of startup financing. The report says that the regulation of the coins/tokens depends on the characteristics, purpose and objective for which they are being issued, which can be grouped into two categories which are 'utility' and 'security' tokens. It however, did not explain the terminology of usage. The report also talks about consumer protection framework, which points out the scandals which took place in the fintech industry including the payment protection scandal in the UK and the Sharda chit fund scam in India. It also mentioned the Gain Bitcoin scam in India. The report suggested that there is a need for legal framework to redress grievances of consumers in the financial sector. This legal framework will be made, specifically addressing the needs in the digital environment. This will ensure consumers of digital financial services, that have meaningful choice and control over their personal data. But, it does not talk about requirement of legal framework for cryptocurrency industry which has potential valuation of 12.9 Billion Dollars in India and 20,000+ Jobs based on the research data of CREBACO Global Inc

Analysis and Comments on the draft bill for banning Virtual Currencies (By Sidharth Sogani & Jagdish Pandya)
Later the bill talks about advantages and use cases of Blockchains and Digital Ledger technologies which was mostly taken from online encyclopedias and other web sources. The bill suggests complete banning of Digital currencies in India, that considers direct and indirect uses as offence. India's Population is 1.3 Billion out of Global population of 7.7 Billion. That means almost 20% of the global population will be banned from usage. This is not practically applicable and will have several implementation issues. It may be noted that that the draft bill refers regulations of only a handful of countries. It ignores United Kingdom (Indian laws are derived from British legal frameworks) and while drafting regulations, British laws must be considered seriously. Along with the UK, it also completely neglects European Union which includes G7 Countries like Germany, France etc. It must be noted that all G7 Countries have regulations for Cryptocurrencies and none have such strict penalties for the same. None of the G7 Countries consider dealing in cryptocurrencies as a criminal offence if all compliances and AML laws are followed and it is declared in one's tax returns. In fact when we look at the G20 Countries, most of them have regulations. Only China has a blanket ban. Argentina and few others along with India have no regulations yet. Looking at the facts, most countries have regulations in place and no one has considered it to be a serious criminal offence. Bitcoin and cryptocurrency have just begun and have evolved to become a movement of change in the global financial system and the way we deal and understand money. About CREBACO

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Report Links:
Draft Bill by Ministry of Finance: https://dea.gov.in/sites/default/files/Approved%20and%20Signed%20Report%20and%20Bill%20of%20IMC%20on%20VCs%2028%20Feb%202019.pdf
Steering Committee Report by Ministry of Finance: https://dea.gov.in/sites/default/files/Report%20of%20the%20Steering%20Committee%20on%20Fintech.pdf
Relevant Reads:
https://indiaincgroup.com/indias-grapple-with-crypto-currency-future-trends-and-implications-india-global-business/