Terrorism. Money laundering. False facts. Exaggerated numbers. All in the melting pot to smear bitcoin.
opinion piece blog published on India’s biggest business daily, the Economic Times, two Indian professors from the city of Calcutta have called for the government to “have proper control over bitcoin.’ They reason that bitcoin is a new ‘high-tech form of hawala’, a traditional and informal money transfer system which works around the banking system.
Tech Hawala: Essentially, a network of hawala operators facilitate money transfers where the sender pays one hawala operator who then instructs another operator in a different country to pay the recipient of the transaction. ‘A money transfer without money movement’ as Interpol puts it. The hawala system, popular in Arab and South Asian countries, is banned in India. The authors saw fit to equate bitcoin to a new form of hawala, claiming that bitcoin is being used to launder money. India’s bitcoin industry, specifically its exchanges, have – for years – followed a self-regulating model enforcing KYC (Know-Your-Customer) norms.
The academics then cite the US Treasury as stating that bitcoin is ‘a decentralized virtual currency’, presumably failing to ascertain the facts themselves from Satoshi’s whitepaper, which they mention in their broadly misinformed blog.
Mints? Central Bank Exchanges?”: “There are some exchanges, which may be treated as mints or a central bank, which are mainly located in China, Hong Kong and Russia,” reads an excerpt from the authors. That ramble continues in stating: “There are various companies called ‘miners’ under each exchange.” Presumably, the two professors from the Indian Statistical Institute – an institution that specializes in research and statistics, no less – are referring to bitcoin exchanges in China, Hong Kong and, inexplicably, Russia. We can’t make sense of what comes after.
Exaggerated Trading Volumes: The two professors then write that bitcoin’s popularity has grown after November’s controversial and unprecedented demonetization run, when the Indian government essentially rendered nearly 90% of the country’s cash obsolete, overnight. At the time, bitcoin was trading around $750.
“On May 27, 2017, the market price of bitcoin in India reached $2,096.68. There has been a clear surge in bitcoin transactions after demonetization,” the professors wrote, somehow linking India’s increasing appetite for bitcoin as the factor behind bitcoin’s rise in value. In reality, bitcoin trading volumes in the country – while growing – is significantly low, less than a million dollars over a 24-hour period, according to BNC data.
“India’s bitcoin trading volumes are relatively small compared to other countries around the world,” revealed Sathvik Vishwanath, CEO of India’s largest bitcoin exchange UnoCoin in a conversation with CCN earlier this year.
Compare India’s modest trading volumes to other Asian markets in Japan, China and Korea, which have collectively seen nearly $250 million in bitcoin traded over the last 24 hours and India’s bitcoin numbers are even irrelevant.
Govt Control/Regulation: The professors point to the US, EU, Japan and Singapore legalizing bitcoin transactions, with “enough effort being made to control the bitcoin economy.” They call on the Indian government to follow suit and release laws to regulate bitcoin. Why? Terrorism, that’s why.
Terrorism: Here it comes:
The bitcoin’s shadow was evident in the supply of money for the 2015 Paris terrorist attacks. The EU is keen to bring the bitcoin under control. The intergovernmental Financial Action Task Force in Paris reported in 2015 that some terrorist websites encouraged sympathisers to donate in bitcoins.
A Europol review in the aftermath of the Paris terror attacks explicitly stated that there was no evidence of terrorists using bitcoin to finance their activities, “despite third party reporting suggesting” their usage.
“US anti-terrorism officials are also reportedly anxious about the way how the Islamic State is accumulating millions of dollars through bitcoins,” the professors revealed, not citing any sources to back such a statement.
“The New York state government has already passed a Bill prohibiting bitcoin,” they added. We’re to presume they’re talking about New York’s BitLicense. Still.
The authors then leave their best for a takedown of bitcoin at the end.
Controlling terrorist funding was one major reason for GoI’s demonetisation initiative. If India fails to regulate bitcoin, this new hawala may ironically become the easy way of funding terrorism. The government should have proper control over bitcoin in the interest of the economy and the security of the country.
Meanwhile, India is likely to legalize digital currencies like bitcoin by taxing bitcoin adopters and passing regulations for the local industry, according to regional reports.
Featured image from Shutterstock.
Last modified (UTC): June 15, 2017 13:58