S Ayya, an activist from Tirunelveli, submitted that many agencies, including social media, were carrying advertisements of cryptocurrencies though the Reserve Bank of India has not approved cryptocurrencies in the country till now.
“The cryptocurrency trading seeks appropriate regulatory authority to control all transactions in a secured mode for the citizens of India. But till today, the Finance Ministry has not set up rules for regulating cryptocurrency trading,” the petitioner said, further contending that there have been several media reports on the usage of virtual currencies for illicit and illegal activities in several jurisdictions.
“The absence of information of counterparties in such peer-to-peer, anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating terror financing,” Ayya said in his affidavit.
He also pointed out that the Bank for International Settlements (BIS) had recently warned that the emergence of cryptocurrencies has become a combination of a bubble, Ponzi scheme and an environmental disaster, and called for policy responses. “The Financial Action Task Force (FATF) has also observed that crypto assets are being used for money laundering and terrorism financing,” he added.
As virtual currencies being in digital form are stored in digital/electronic media that are called electronic wallets, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack, etc., according to Ayya.
The petitioner also recalled several recent incidents related to the cryptocurrency scams that occurred in Kerala, Karnataka and Maharashtra, stating that the Indian cyber crime wing should be given training to solve such issues and conduct investigations properly.
Therefore, the government should stop and ban advertisements related to cryptocurrency trading in all kinds of media such as digital media, visual media, social media, press, radio and audio until the rules are constituted, he said, seeking a direction from the High Court to the Union government in this regard.