Centre for Internet and Society

India CBDC

aman — 2022-07-04T10:02:15Z

For more details visit https://cis-india.org/internet-governance/india-cbdc

Central Bank Digital Currencies: A solution to India’s financial woes or just a piece of the puzzle?

aman — 2022-07-04T10:04:36Z

Central Bank Digital Currencies (CBDCs) have, over the last couple of years, stepped firmly into the global financial spotlight. India is no exception to this trend, with both the Reserve Bank of India (RBI) and the Finance Minister referring to an Indian CBDC that is currently under development.

With the introduction of this CBDC a matter of when and not if, India and many other countries stand on the precipice of re-imagining their financial systems. It is therefore imperative that any attempt at introducing a CBDC is preceded by a detailed analysis of its scope, benefits, limitations, and how it has been implemented in other jurisdictions. This policy brief looks to achieve that by examining the form that a CBDC could take, what its policy goals would be in India, the considerations the RBI would have to account for and whether a CBDC would work in present-day India. Finally, it also looks at the case of Nigeria to draw insights that could also be applied to the introduction and operationalisation of a CBDC in the Indian context.

The full issue brief can be accessed here.

For more details visit https://cis-india.org/internet-governance/blog/central-bank-digital-currencies-a-solution-to-india2019s-financial-woes-or-just-a-piece-of-the-puzzle

Non-financial blockchain uses pdf

aman — 2022-06-28T12:06:53Z

For more details visit https://cis-india.org/internet-governance/non-financial-blockchain-uses-pdf

Issue Brief_Regulating Crypto-asset advertising in India

aman — 2022-05-25T07:40:42Z

For more details visit https://cis-india.org/internet-governance/blog/issue-brief_regulating-crypto-asset-advertising-in-india

Annex 1 - Excerpts from comments submitted by Ripple

aman — 2022-01-27T09:12:40Z

For more details visit https://cis-india.org/internet-governance/annex-1-excerpts-from-comments-submitted-by-ripple

CIS report on Regulation of Private Crypto-Assets in India

aman — 2022-01-27T09:02:52Z

For more details visit https://cis-india.org/internet-governance/cis-report-on-regulation-of-private-crypto-assets-in-india

Centre for Internet&Society ecommerce amendments

aman — 2021-07-27T14:36:57Z

For more details visit https://cis-india.org/internet-governance/centre-for-internet-society-ecommerce-amendments

At the Heart of Crypto Investing, There is Tether. But Will its Promise Pan Out?

aman — 2021-07-01T14:46:46Z

The $18.5 million fine levied by the New York attorney general’s office earlier this year to settle a legal dispute, raises more questions than answers.

The article was published in the Wire on June 30, 2021.

Cryptocurrencies have become the centerpiece of the global digital zeitgeist in 2021. Anyone remotely familiar with them would probably be able to name a few of the famous ones like Bitcoin and Ethereum.

However, there exists a lesser known cryptocurrency at the heart of this $ 3 trillion market, Tether. Issued by the company Tether.ltd, Tether forms the foundation for modern day crypto trading and could potentially be one of the biggest schemes in financial history.

Tether is a special type of cryptocurrency known as a stablecoin. Unlike coins such as Bitcoin and Ethereum, Tether’s monetary value is not a function of the forces of the crypto market but is rather pegged to the US Dollar. What this means is that 1 Tether will always be worth exactly 1 USD. This fixed value has allowed it to occupy a unique position within the crypto ecosphere, with it becoming the de facto standard of liquidity within these markets by acting as a widely accepted substitute to the US dollar.

At present, buying cryptocurrency using traditional fiat money (like dollars or rupees) comes with certain challenges. Purchasing with traditional currencies requires the use of banking services that come with a host of fees and time delays. At the same time, purchasing one type of crypto coin like Bitcoin with another coin like Ethereum can prove difficult due to the constantly shifting values of both coins. This is where Tether comes in. Acting as a bridge between the traditional financial world and the crypto market, it has become a sort of digital dollar — one that makes cryptocurrency trading significantly easier.

The problem with tether

On the surface, Tether seems like a perfectly reasonable innovation that looks to fill in the gaps that exist within the market. Dig a little deeper than the surface and the discrepancies start to appear.

The premise of Tether’s appeal comes from its value being pegged to the US dollar. The company initially claimed to have achieved this by ensuring that their currency was “fully backed” by cash reserves.

The process looked something like this: You gave the company 1 US dollar and they gave you 1 Tether that you could use to make other crypto purchases. If you returned your Tether, you would get your dollar back and the Tether you returned would be ‘burned’ (removed from circulation). This meant that for every Tether that existed the company would have 1 corresponding dollar in reserve in the bank, ensuring that the currency was backed.

An illustrated image shows US dollars, cryptocurrency and NFT written on a phone. Photo: Marco Verch/Flickr CC BY 2.0

However, there was an enormous flaw in this system. Since Tether.ltd was the sole creator of the coin, it could create as many of them as it wanted while falsely claiming that these new Tethers were also backed fully by cash reserves. And this is exactly what is alleged to have happened in a case brought forward against Tether.ltd by the New York Attorney General’s office. The filings made by the attorney general noted that in their investigation they found that not only did the company have inadequate reserves to back the number of Tethers in circulation, but that there were significant periods of time wherein the company did not have any bank accounts or any access to banking at all — thereby exposing Tethers claims of being backed as being demonstrably false.

The scam was alleged to have worked as follows. First, the company would issue new coins that were not actually backed by any corresponding dollars. These new Tethers were then transferred to Bitfinex – a cryptocurrency exchange that was owned by Tether.ltd. These unbacked Tethers would then be used to buy bitcoin, with the momentum from this increased demand causing the price of bitcoin to rise. They would then exchange their newly appreciated bitcoins for actual US dollars — thereby essentially creating real money where none had previously existed. While there is no conclusive evidence for this being true, research has pointed to increased tether supply causing a boom in bitcoin prices in 2017.

The company has since altered its claim from being backed by cash reserves, to now being backed by a number of assets (which it refers to as its ‘reserves’) – of which cash only formed a small subset. It maintains that the cumulative value of their assets does equal the number of Tethers in circulation, though it is worth noting that the veracity of these claims has been consistently challenged.

How does this affect the rest of the crypto market?

Tether’s problems are unfortunately not limited to itself, but rather affect the entire crypto marketplace. If the New York Attorney General’s filings are true, then it would mean that a significant amount of the demand in the crypto market could potentially not be backed by any actual purchasing power and that the price of cryptocurrencies like bitcoin have been artificially inflated.

If Tether was ever found (either by a regulatory body or through leaks) to have been creating unbacked units of its currency then it would result in a significant amount of buying pressure disappearing from the crypto market. And since Tether isn’t just any other cryptocurrency but rather is a medium for exchange in the crypto world, its downfall would have severe knock on effects that could cause a serious crash in the entire crypto market.

Quantifying such knock-on effects would be extremely difficult, however as previously mentioned, research has clearly outlined a significant causal relationship between tether’s supply and increased bitcoin prices. This leads to the conclusion that the reverse would likely be true; that a rapid decrease in tethers would cause a significant decrease in the price of bitcoin and other cryptocurrencies.

Ultimately, no one knows for sure whether Tether is a scheme or not. However, mounting evidence from a number of independent sources have all pointed to discrepancies in the company’s functioning. What is clear is that, if the allegations are in fact true, then Tether poses a serious risk to the entire crypto marketplace and investors.

For more details visit https://cis-india.org/internet-governance/blog/the-wire-aman-nair-june-30-2021-cryptocurrency-tether-stablecoin-dollar

Comments on eCourts phase III

aman — 2021-06-03T12:15:17Z

For more details visit https://cis-india.org/internet-governance/comments-on-ecourts-phase-iii-3

Whatsapp Privacy policy 2021: issue brief competition law

aman — 2021-03-22T10:36:46Z

For more details visit https://cis-india.org/internet-governance/whatsapp-privacy-policy-2021-issue-brief-competition-law

CIS Comments Revised NPD report

aman — 2021-03-22T05:39:03Z

For more details visit https://cis-india.org/internet-governance/cis-comments-revised-npd-report

National Strategy on Blockchain

aman — 2021-03-22T05:33:44Z

For more details visit https://cis-india.org/internet-governance/national-strategy-on-blockchain

The Government needs to make sure our emails don't destroy the environment

aman — 2021-01-25T14:17:29Z

The Government's data centre policy must be more reflective of energy requirements and sustainable practices to effectively ensure that India's growing digital user base doesn't hurt the environment.

Ask people to name the first things they think of when you say climate change and you can expect a few standard answers. Polar bears on shrinking ice caps, cities suffocated from car exhaust fumes and mass deforestation are all surely to be somewhere on the list of responses. What you probably won’t find, however, is people discussing their social media. Or their email. Or any piece of the immeasurable amount of data that we produce on the internet on a daily basis. Yet all of this data is far from green, and is substantially increasing our carbon footprint. So the question arises, how is our data contributing to climate change, and what can policy makers do about it?

There is a tendency to focus on the turnover of hardware when discussing the climate impact of digital technology. And while this is an important element of the sector’s impact, it is essential that policymakers also recognise the impact of intangible elements of the digital ecosystem - such as data. Every piece of data that is created or transmitted across the internet has an environmental cost. That cost being the energy required (and by extension the fossil fuel amount used) to operate the technology that hosts and transports the data.

Admittedly, the environmental impact and cost of one person checking their instagram or even reading this article is quite low. But aggregated across the estimated number of internet users in the world, digital technologies are estimated to be responsible for 1.7 billion tonnes of greenhouse gases - which is about 4% of the global greenhouse gas production and roughly how much is produced by the global airline industry.

Another key element of data’s environmental impact is the establishment and operation of data centres. Data centres are establishments that house computing and ICT equipment. These centres are critical infrastructure components to the functioning of the internet and are used to store an immense volume of data. As the number of data centres has exploded over the last decade, they have come to account for 1% all global greenhouse gas production on their own, and are expected to contribute to 14% of all emissions by 2040.

India’s growing data centre problem

As the number of Internet users in India grows at an exponential rate, it is imperative that the government take a proactive approach to creating sustainable infrastructure that can meet the ICT demands of the population.

Recently, the Ministry of Electronics and Information technology, released its draft policy on data centres. The policy outlined the government’s aim at establishing a large number of domestic data centres that will be used to store all data created within the country. The government’s policy envisions India as being one of the world leaders in data centre establishment and operation - on a par with countries such as Singapore who now hold that mantle.

However, despite presenting this grand vision, the policy provides no specifics on how it plans to cope with the environmental stress that these new centres would bring. The policy states that ensuring uninterrupted power to these centres will be a key priority of the government - a burden that would be far beyond the capacity of current renewable energy sources in the country. Taking the example of Singapore, almost 7% of all electricity consumption in the country was from data centres. Such proportionate consumption by Indian data centres would realistically only be possible through an expanded use of fossil fuel generated electricity.

To give the policy some credit, it does mention ‘encouraging’ the use of renewable energy for data centres but fails to mention any specific schemes or measures to ensure renewable energy investment and growth is enough to keep up with growing data centre energy demands.

What can policy makers do?

The question arises, how can policy makers make data centres more sustainable? Is there any way of reducing the energy consumption of these data centres?

In short, not really right now. It has been estimated that 40% of total energy consumption by data centres is used in cooling. And while there is the possibility that building these data centres in cooler environments would reduce these costs - converting shimla, coorg, ooty and other cool weathered hill stations into monuments of data centre infrastructure does not seem particularly practical. And so short of investing heavily into research and development for the future and conforming to global standards of data centre operation, there is not much the government can do now outside of focusing on the source of the energy that is used by these centres.

Keeping this in mind, the first step in evolving India’s data infrastructure has to be investing in and developing clear schemes for promoting renewable energy in the country. While India has seen positive growth in renewable energy infrastructure, it would require substantial private and public investment in order to meet its target of 450 GW of renewable energy by 2021. Widespread development of data centres would only further stress India’s energy needs and would therefore require a commensurate increase in the amount of renewable energy available. As such it is imperative that the state not stick to vague statements of ‘encouraging renewable energy’ or ‘collaborating between ministries’ and rather adopt a revised policy for developing renewable energy for digital infrastructure.

Such a step would ensure the sustainability of the country’s digital infrastructure, and ensure that every Indian has access to both clean air and their email.

For more details visit https://cis-india.org/internet-governance/blog/the-government-needs-to-make-sure-our-emails-dont-destroy-the-environment

TIkTok: It’s time for Biden to make a decision on his digital policy with China

aman — 2021-01-22T06:11:43Z

As the United State's new president comes into office he is faced with creating a cohesive digital relations policy that corrects some of the damage done by his predecessor. This article is the first part of a series analysing his policies and challenges.

While on the campaign trail, now US president elect Joe Biden, made it clear to voters that he viewed Tik Tok as “a matter of genuine concern.” The statement came amidst a growing environment of hostility within the American government against the application. At the helm of the hostility was (now former) president Donald Trump’s passing of an executive order banning Tik Tok in the country and his attempts at forcing its parent company ByteDance to restructure the app under American ownership. Now, as the presidency passes hands, it is worth examining how the government got here and just how concerned the Biden administration should be with Tik Tok and how their strategy with the app could set the tone for digital relations with China going forward

The Road so far: The ban and forced sale of TikTok

America’s motivation to ban and sell the application can be explained by two contrasting factors: the cybersecurity risks that TikTok poses, and the country’s currently ongoing trade war with China. On the security side TikTok has faced immense scrutiny from governments around the world as to the amount of data that the application collects from its users as well as the potential links between Bytedance and the Chinese government. Furthermore there is a belief that due to the Chinese legislation that compels companies to assist the state on matters of national intelligence, there is little TikTok could do should the Chinese state decide to use it as an instrument of data collection. On the side of trade, the TikTok ban represents one of the more landmark blows dealt by the Trump government in its trade war with China. The US, since the start of his presidency has levied exclusive tariffs on specific Chinese commodities totalling to more than $550 billion. China has in response levied its own tariffs on certain American goods, with a total value of those estimated at $185 billion. Beyond these tariffs, the move to ban TikTok extends the trade war by creating clear hurdles for Chinese corporations to exist within the US market and firmly extended Trump’s protectionist trade policies into the digital sphere.

As such, on 6th August 2020, Trump released an executive order banning TikTok (as well as Chinese messaging and social media app Wechat). The ban has, however, since been indefinitely suspended as part of ongoing litigation on the matter at the federal level.

Shortly after the ban, came the attempts at forcing through the sale. While the deal has generally been referred to as ‘the TikTok sale’, it is not actually an outright purchase of the social media platform by an American company (Microsoft attempted such a purchase but was rejected by Byte Dance). Rather, the deal would see the establishment of a new US based subsidiary called TikTok global that would be partly owned (20%) by Oracle and Walmart, with Oracle becoming a trusted technology provider in order to ensure that US user’s data remains within the state. The agreement stipulates that the board of this new entity would have 4 out of 5 of the seats populated by US citizens, and that the company would go public as well. The current agreement would still see Bytedance retain ownership of the algorithms used by TikTok, which is in line with restrictions from the Chinese government preventing the sale of the algorithm to a foriegn owner without a state granted license.

How should the Biden administration handle this situation?

Dealing with the TikTok question must be one of the Biden administration’s top most priorities. The most obvious question they face is whether or not to reverse the ban and to continue to push through the sale between Bytedance and Oracle.

The case for enforcing the ban until the sale to American owners seems one that is straightforward enough. The cybersecurity concerns surrounding Bytedance’s proximity to the Chinese state and the influence of Chinese legislation are reasonable concerns. And any data gained from the application in the hands of a hostile state could be potentially harmful. This threat could be potentially reduced based on the role played by Oracle as a trusted technology partner. However with details of what exactly constitutes the functions of a ‘trusted technology partner’ it is impossible to say this with any great certainty. Simultaneously, there is a slight sense of irony in a Chinese based digital company protesting against another country’s protectionist stance to the internet.

Nonetheless these benefits are in many ways greatly over exaggerated, and in many ways allowing TikTok to return without requiring a sale could prove more beneficial in the long term. Not only would the app’s return be welcomed by its immense audience (estimated 100 million US users), it would also be a clear demonstration of America’s commitment to a less fragmented internet and more open digital economy. Furthermore, revoking the ban would also allow for the opportunity to reassess and reformulate the US’s economic and political strategy with regards to Chinese technology.

On the economic side, a retraction of the ban could signal the beginning of the end of the US-China trade war. Chinese investors are sure to see the shift from a radical republican president to a centrist democrat one as the perfect opportunity to increase foreign investment, which had been steadily declining recently. Such investment could prove significantly more substantial to the United States in a post covid-19 world as opposed to even in 2019. It is not unimaginable that Biden would look to maximise this opportunity to boost the economy.

On the political side, the government has to evaluate the success of sanctions levied against Chinese technology and whether that approach of blanket banning will translate effectively to the digital sphere. Not only has the US’s sanctions against certain chinese technologies proved unsuccessful, tools such as VPNs that can negate a ban make this strategy even less effective in the digital space.

The largest hurdle to revoking the ban would be the genuine cybersecurity concerns with a Chinese corporation having access American citizens’ data. However, dealing with these concerns through a simple ban of the application would only solve this one instance of excessive surveillance and data collection by a foreign app. Rather any solution must look to fix the issue at its root - that being the need for a more cohesive, detailed and overarching national data protection and cybersecurity policy. Such a policy could place clear limitations on data collection, stipulate data localisation policies for sensitive information and outline numerous other means of reducing the threat involved with allowing applications from states such as China to operate in the US.

Ultimately, Biden will be confronted with the reality of this situation the moment he enters office. The decision he makes on TikTok would set the tone for his term and for his government’s relationship with China. Whatever he decides to do, he needs to do it as soon as possible. The clock is ticking.

For more details visit https://cis-india.org/internet-governance/blog/tiktok-it2019s-time-for-biden-to-make-a-decision-on-his-digital-policy-with-china

Whatsapp Privacy Policy Competition Law

aman — 2021-03-22T07:18:25Z

For more details visit https://cis-india.org/internet-governance/whatsapp-privacy-policy-competition-law