By Press Trust of India | Updated: 20 March 2023

A 37-year-old businessman from Mira Road in Thane has been cheated of Rs 33.65 lakh after he was tricked into investing in Bitcoins on the false promise of lucrative returns, police said on Monday.

Police have registered a case against two persons under section 420 (Cheating and dishonestly inducing delivery of property) of the Indian Penal Code.

An official said the complainant came into contact with the accused persons through a WhatsApp group. In February 2022, he received a message from two persons, including the group administrator, asking him to become a Bitcoin investor if he wants lucrative returns.

“The businessman agreed and invested money. He got good returns initially, but later he suffered losses and stopped trading. But the accused contacted him and assured him that he will get guaranteed returns and demanded a 20 percent commission. Later, he saw an amount of $2,47,210 (roughly Rs. 2 crore) in his Bitcoin account but couldn’t withdraw due to technical issues,” the official said.

After a couple of days, he received a message that the Bitcoin application was frozen as the “contract has expired”. The accused duo also became incommunicado, following which the businessman lodged a complaint with the police.

No arrest is made so far and further investigation is underway.

Bitcoin, a virtual currency, is not regulated in India and its circulation has been a cause for concern among central bankers the world over for quite a while now. The Reserve Bank of India has also cautioned users, holders and traders of virtual currencies, including Bitcoins.

By Reuters | Updated: 16 March 2023

Crypto investors pulled around $3 billion (roughly Rs. 24,840 crore) overall from the stablecoin USDC in three days, the company behind the token said in a blog post on Thursday, as investors rushed to redeem their holdings in the wake of the collapse of Silicon Valley Bank.

USDC broke its dollar peg on Saturday after Circle revealed that $3.3 billion (roughly Rs. 27,330 crore) of the coin’s reserves were at SVB.

The stablecoin fell to as low as $0.88 (roughly Rs. 70), according to CoinGecko data, but returned to $1 (roughly Rs. 80) on Monday. Circle announced it would allow automatic USDC redemption through a new banking relationship, with Cross River Bank.

Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with traditional currencies. USDC is the second-biggest stablecoin with a market cap of $37.6 billion (roughly Rs. 3,11,350 crore).

From Monday to Wednesday, Circle processed $3.8 billion (roughly Rs. 31,466 crore) of USDC redemptions (investors swapping their tokens back into US dollars) and created $0.8 billion (roughly Rs. 6,600 crore) more of the token, Circle’s blog post said, meaning investors have pulled around $3 billion overall in the three days.

The rapid outflows come after US banking regulators issued a fresh warning last month that crypto-related deposits in banks could be subject to liquidity risks. The regulators highlighted deposits linked to stablecoins as susceptible to volatility during periods of market stress if there is a rapid influx of redemption requests.

In the past week, investors have pulled a net $6 billion (roughly Rs. 49,685 crore) from the coin, according to CoinGecko data.

“The events of the past week have impacted the liquidity operations for USDC,” Circle said.

“We will continue efforts to add additional transaction banking partners.”

© Thomson Reuters 2023

By Press Trust of India | Updated: 14 March 2023

Digital or e-rupee worth over Rs 130 crore is in circulation on a pilot basis as of February 28, finance minister Nirmala Sitharaman said on Monday.

The Reserve Bank of India (RBI) had launched pilots in digital rupee in the wholesale segment (e₹-W) on November 1, 2022 and in the retail segment (e₹-R) on December 1, 2022.

Nine banks — State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC, have been participating in the digital rupee wholesale pilot, Sitharaman said.

“As on February 28, 2023, the total digital rupee – Retail (e₹-R) and digital rupee – wholesale (e₹-W) in circulation is Rs 4.14 crore and Rs 126.27 crore, respectively,” Sitharaman said in a written reply in the Lok Sabha.

The e₹-R is in the form of a digital token that represents legal tender. It is being issued in the same denominations that paper currency and coins are currently issued.

It is being distributed through financial intermediaries, i.e., banks. Users can transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices.

The e₹ pilot for retail segment was launched on December 1, 2022 in five select locations in closed user group for making Person to Person (P2P) and Person to Merchant (P2M) transactions.

The on-boarded merchants comprise various segments like tea vendors, fruit sellers, street side and sidewalk vendors (including migrant fruit vendors selling on the pavement opposite the RBI’s headquarters, Mumbai), small shopkeepers etc,” Sitharaman said.

Further, institutional merchants like retail chains, petrol pumps etc. have also been on-boarded to enable transactions in digital rupee across various outlets.

Few online merchants have also been enabled to accept digital rupee for the convenience of users.

In the approximately three months of the pilot, the total digital rupee – Retail (e₹-R) in circulation in the select locations is Rs. 4.14 crore, the minister said.

“Various use cases, technological architecture and design features are being tested during the pilot… Further steps, including expansion of use case, have to be through a phased implementation strategy on the basis of feedback received during the pilots,” Sitharaman added.

By Reuters | Updated: 6 March 2023

Binance, one of the world’s largest cryptocurrency exchanges, developed a plan to avoid the threat of prosecution by US authorities as it started an American entity in 2019, the Wall Street Journal reported on Sunday.

Any lawsuit from US regulators, who had signaled a coming crackdown on unregulated offshore crypto players, would be like “nuclear fall out” for Binance’s business and its officers, the WSJ said, citing a Binance executive’s warning to colleagues in a 2019 private chat.

The report is based on messages and documents from 2018 to 2020 reviewed by The Wall Street Journal as well as interviews with former employees.

Binance, founded in 2017, and Binance.US are more intertwined than the companies have disclosed, mixing staff and finances, and sharing an affiliated entity that bought and sold cryptocurrencies, the report said.

It noted that Binance.com operated mainly from hubs in China and Japan, yet a fifth of its customers were based in the United States. Binance.US is based in San Francisco.

Binance developers in China maintained the software code that supported Binance.US users’ digital wallets, potentially giving Binance access to US customer data, the WSJ reported.

Since 2020, the Department of Justice and Securities and Exchange Commission have been investigating Binance’s relationship to Binance.US, the report said, citing subpoenas and people familiar with the matter. If U.S. regulators determine that Binance has control over its U.S. entity, they could claim the power to police Binance’s entire business.

In an emailed statement to Reuters, a Binance spokesperson said, “we have already acknowledged that we did not have adequate compliance and controls in place during those early years…we are a very different company today when it comes to compliance.”

Binance.US, the SEC and DOJ did not immediately respond to Reuters’ requests for comment.

Binance is under heightened scrutiny as three U.S. senators this week asked the giant cryptocurrency exchange and Binance.US for information about their regulatory compliance and finances.

Reuters has reported that Binance.US was created as a de facto subsidiary in 2019 to draw the scrutiny of US regulators away from Binance.com.

© Thomson Reuters 2023

By Reuters | Updated: 25 February 2023

A push by Group of 20 (G20) president India to regulate cryptocurrencies gained support from both the International Monetary Fund and the United States on Saturday as finance chiefs of the bloc wrap up two-days of talks.

India has said it wants a collective global effort to deal with problems posed by cryptocurrencies such as bitcoin, and the finance ministry said it had held a seminar for G20 member states to discuss how to come up with a common framework.

Speaking to Reuters on the sidelines of the G20 meeting in Bengaluru, US Treasury Secretary Janet Yellen said it was “critical” to put in place a strong regulatory framework but added that the United States had not suggested any outright bans.

“We haven’t suggested outright banning of crypto activities, but it is critical to put in place a strong regulatory framework,” Yellen said. “We’re working with other governments.”

Earlier, IMF Managing Director Kristalina Georgieva told reporters after co-chairing a meeting with Indian Finance Minister Nirmala Sitharaman that banning crypto should be an option.

Indian Prime Minister Narendra Modi’s government has for several years debated drafting a law to regulate or even ban cryptocurrencies but has not made a final decision. The Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme.

On Thursday, the IMF laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies legal tender status.

Such efforts have become a priority for authorities, the fund said, after the collapse of a number of crypto exchanges and assets over the last couple of years, adding that doing nothing was now “untenable”.

© Thomson Reuters 2023

By Reuters | Updated: 24 February 2023

The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status.

The global lender of last resort said its Executive Board had discussed a paper, “Elements of Effective Policies for Crypto Assets,” that provided “guidance to IMF member countries on key elements of an appropriate policy response to crypto assets.”

Such efforts have become a priority for authorities, the fund said, after the collapse of a number of crypto exchanges and assets over the last couple of years, adding that doing nothing was now “untenable”.

The top recommendation was to “safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status.”

The IMF had hit out at El Salvador in late 2021 when the central American country became the first to adopt bitcoin as legal tender, a move that has since been copied by Central African Republic.

Other advice on Thursday’s list, which comes as G20 decision makers meet in India, included guarding against excessive capital flows, adopting unambiguous tax rules and laws around crypto assets, and developing and enforcing oversight requirements for all crypto market actors.

Countries should also establish international arrangements to enhance supervision and enforce regulations, the IMF added, as well as set up ways to monitor crypto’s impact on the stability of the global monetary system.

Outlining its Executive Board’s assessment, the IMF said directors welcomed the proposals and agreed the widespread adoption of crypto assets “could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.”

They “generally agreed,” too, that crypto assets should not be granted official currency or legal tender status, and though strict bans of assets are “not the first-best option,” a few directors thought they should not be ruled out.

© Thomson Reuters 2023