Altcoins Talks - Cryptocurrency Forum
Further Discussions => Legality & Taxation of Cryptos => Topic started by: UKprod on May 01, 2021, 09:58:04 AM
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Hi everyone! This is my post on how crypto users can challenge a ban on crypto imposed by their government and obtain a favorable result against the same. I have kept this post to cover maximum number of jurisdictions, so that it helps crypto communities across the globe should their government impose an outright ban on crypto. Further, I kept legal jargons to the minimum, for ease of reading.
Legal ground to be taken:
- The substance of this legal ground relies on the "Right to constitutional remedies" and "Freedom to carry out trade or practice a profession" being provided in the constitution. Hence, kindly verify if your country provides these rights. Most democratic countries provide these rights.
- Under the freedom to carry out trade or profession, any person can carry a trade/profession if it does not pose a threat to the government or other people. If the trade/profession has the potential to earn revenue, carrying out such trade should be allowed with full freedom. Now when it comes to trade/profession, the crypto economy has been supporting a number of lives that are solely/largely dependent upon crypto income. In addition to the core crypto participants such as miners, traders, etc., crypto is widely used by digital artists selling NFT, bloggers, musicians, etc. Hence, ban on crypto is equivalent of restricting the freedom to carry out trade and profession.
- Once it is established that use of crypto is one of the basic fundamental rights, the next step would be to invoke right to constitutional remedies whereby a person can file a petition before a court either as a writ petition or public interest litigation/petition (as applicable in your country) for violation of their fundamental rights by the government through such ban on crypto. In such cases, if the person petitioning is able to prove before the court that ban on crypto is essentially violating the constitutional rights, then the court would order a rollback of such ban
Fact specific ground to be taken:
- India: The Indian inter-ministerial committee in its report on cryptocurrencies has failed to identify various use cases and functions of crypto such as NFTs on which digital art thrives, charity such as the www.cryptorelief.in which is working towards oxygen supply during the ongoing COVID-19 crisis etc. Hence, it would be essential to highlight the ignorance of the legislature while passing the law, which would provide the court with a valid reason to provide relief in this regard.
Possible arguments by government and how to counter those:
- Threat to domestic currency and economics: Governments have always worried about crypto replacing their sovereign currency. Further, another area of concern for the governments is that if crypto is used as legal tender, it will face a difficulty in regulating the flow of currency, interest rates etc. In such cases, the governments are welcome to ban the 'use of crypto as legal tender', but not outright ban the crypto. In logical terms this can be explained as 'killing with a knife' has to be made illegal and merely 'using a knife' cannot be made illegal since it can be used for a lot of productive purposes. Thereafter, the government can look into classifying crypto as an asset and regulate exchange of assets.
- Threat to foreign exchange reserves: Most governments would perceive a risk of loosing their foreign exchange reserves due to investments flowing into crypto and thereby creating decrease in value of their own currency. However, this can be countered by providing details of how people stand to gain by carrying out their trade and profession through crypto and how it would in reality be a source of earning foreign exchange reserves
- Used for illegal activities: Another concern raised by governments, is that crypto is used for illegal activities such as extortion, kidnapping, ransomwares, etc. However, the argument to be taken here is that use of crypto for such activities can continue even if cryptocurrencies are banned in a country and a ban is likely not able to stop it, since there are various means of carrying out such activities. Further, similar to the logic explained above, "use of crypto in illegal activities" needs to be banned and not mere "use of crypto".
- Can be used for money laundering: One more concern of the government is that it can be used easily for money laundering, it must be noted that flow of currencies from one wallet to another can be traced easily in most blockchains. Hence, the flow of money can be traced in most cases at one point or another. Irrespective of this, where a person is found to be laundering money using cryptocurrencies, they need to be tried under the Money Laundering Act, rather than banning cryptocurrencies. The governments have a wrong notion that banning cryptocurrencies would stop money laundering through cryptocurrencies. For someone who is rogue enough to launder money, would a simple ban on cryptocurrencies stop them? Hence, banning crypto currencies is not the solution.
I hope this is useful. Do let me know in case you come across any other additional legal grounds that can be taken. I will be happy to incorporate the same in this post so that this can be used as a single reference point by everyone.
Further, do let me know the fact specific grounds that can be taken for your country and I would be pleased to incorporate it into my post. Thank you.