Centre for Internet and Society

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

India CBDC

aman — 2022-07-04T10:02:15Z

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

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

CIS Seminar Series: Information Disorder

aman — 2021-08-11T11:17:57Z

The Centre for Internet and Society is announcing the launch of a seminar series to showcase research around digital rights and technology policy, with a focus on the Global South.

The CIS seminar series will be a venue for researchers to share works-in-progress, exchange ideas, identify avenues for collaboration, and curate research. We also seek to mitigate the impact of Covid-19 on research exchange, and foster collaborations among researchers and academics from diverse geographies. Every quarter we will be hosting a remote seminar with presentations, discussions and debate on a thematic area.

Seminar format

We are happy to welcome abstracts for one of two tracks:

Working paper presentation

A working paper presentation would ideally involve a working draft that is presented for about 15 minutes followed by feedback from workshop participants. Abstracts for this track should be 600-800 words in length with clear research questions, methodology, and questions for discussion at the seminar. Ideally, for this track, authors should be able to submit a draft paper two weeks before the conference for circulation to participants.

Coffee-shop conversations

In contrast to the formal paper presentation format, the point of the coffee-shop conversations is to enable an informal space for presentation and discussion of ideas. Simply put, it is an opportunity for researchers to “think out loud” and get feedback on future research agendas. Provocations for this should be 100-150 words containing a short description of the idea you want to discuss.

We will try to accommodate as many abstracts as possible given time constraints. We welcome submissions from students and early career researchers, especially those from under-represented communities.

All discussions will be private and conducted under the Chatham House Rule. Drafts will only be circulated among registered participants.

Please send all abstracts to workshops@cis-india.org.

Theme for the first seminar (to be held on an online platform)

The first seminar will be centered around the theme of ‘Information Disorder: Mis-, Dis- and Malinformation.’ While the issue of information disorder, colloquially termed as ‘fake news’, has been in the political forefront for the last five years, the flawed attempts at countering the ‘infodemic’ brought about by the pandemic proves that there still continues to be substantial gaps in the body-of-knowledge on this issue. This includes research that proposes empirical, replicable methods of understanding the types, forms or nature of information disorder or research that attempts to understand regulatory approaches, the layers of production and the roles played by different agents in the spread of ‘fake news’.

Accordingly, we invite submissions that address these gaps in knowledge, including those that examine the relationship between digital technology and information disorder across a spectrum of fields and disciplines. Areas of interest include but are not limited to:

Information disorders during COVID-19
Effects of coordinated campaigns on marginalised communities
Journalism, the State, and the trust in media
Platform responsibility in information disorder
Information disorder in international law/constitutional/human rights law
Information disorder as a geopolitical tool
Sociopolitical and cultural factors in user engagement

Timeline

Abstract Submission Deadline: August 25th
Results of Abstract review: September 8th
Full submissions (of draft papers): September 30th
Seminar date: Tentatively October 7th

Contact details

For any queries please contact us at workshops@cis-india.org.

For more details visit https://cis-india.org/internet-governance/blog/cis-seminar-series-information-disorder

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