The law made during the Nineties is the base of Bitcoin, a cryptocurrency, being illegal in Nepal. The government must be open to adapting new technology. Innovation needs to drive policies not the other way around
Soon after Tootle and Pathao took over the transportation market in Nepal, the Department of Transport Management shared a notice announcing ride-sharing as illegal. Similarly, the government attempted to charge a high licensing fee when Wifi became mainstream in 2006. The driving force behind cases like these is the lack of research and reluctance in proactive policy making, which in turn discourages innovation and new technology. The illegality of ride sharing applications can be compared to how Bitcoin is now being banned in Nepal.
On August 13, 2017, Nepal Rastra Bank issued a notice banning Bitcoin. Two acts: Foreign Exchange Regulation Act 2019 BS and Nepal Rastra Bank Act 2058 BS have been given as the reasons behind this ban. However, what is more baffling is that the ban has not been followed up by research, nor was the ban based on research. In both scenarios, policymaking is reactive and fearful of new changes rather than adapting itself to them.
Ever since the emergence of Bitcoin in 2009, it has started a global debate on cryptocurrency. A key question on this ongoing debate is: “Does cryptocurrency fall under the definition of money?” In theory, cryptocurrency follows all the rules of money, such as it being a medium of exchange. However, practically, Bitcoin or any other cryptocurrency will not replace local currencies (at least for the next ten years) as every country needs to establish their own monetary policy to manage factors such as inflation. Cryptocurrencies are not stable enough to make price comparisons and transactions. For example, it doesn’t make sense to pay $3 one day and pay $57 on another day for the same cup of coffee. Globally, many countries have defined cryptocurrency as an asset and is taxed accordingly.
As the technological world is intrigued by Bitcoin, they are equally fascinated by the promises of blockchain, the technology behind Bitcoin.
Blockchain Foundation Nepal in support of World Vision International and Paluwa Pleaders organised a Blockchain Symposium 2019 in November. Five research papers were presented including the legality of cryptocurrency like Bitcoin in Nepal, how Sustainable Development Goals can be addressed through blockchain, a survey to understand the mentality of Nepali towards blockchain and agile project management in blockchain.
While presenting on the legality of cryptocurrency, Shishir Subedi, a director of Paluwa Pleaders, stated that advocates from the government side and judges do not even know the basic concept of Bitcoin in order to make rational decisions in court. He was specifically referring to the case of involving Bitsewa, which is still ongoing in Kathmandu District Court. This has been one of the biggest hurdles for the Nepali technological advancement scene, where the lawmakers and practitioners are reluctant to do research, bring relevant experts and act proactively.
As digital and physical realities are merging to form a single integrated form of modern living, the argument that policymakers should be reactive and let the previous laws define the current innovation is obsolete. Santosh Shrestha, the co-founder of Rumsan Tech, says, “New technologies and innovation cry for new regulations and laws. But while we wait for regulations to catch up with the speed of development of these new technologies, people who use these technologies usually will need to “break” the old law.”
While the Electronic Transaction Act 2063 BS (2008) has not even defined online payment system properly, it is ambitious to relate this to address blockchain and cryptocurrency. However, we can introduce the minimum regulations scheme, which allows the innovation to flourish without disrupting the current order massively. We can curb on the trading part whereas being lenient on the development aspect.
Saujanya Acharya, project lead of ‘Sikka’, a digital asset transfer network that transfers digital credits to beneficiaries especially used for aid distribution, expressed his frustration at the ambiguity of these laws as Sikka had to back out from using Ethereum (uses cryptocurrency) because of the law of Nepal. They later switched from Ethereum to Hyperledger because there’s no crypto involved in hyperledger. A comparable example would be if vending machines give out cocaine, the vending machine itself should not be made illegal. The ambiguous regulations should not slow down the innovation process. In the current scenario, where majority of the policymakers and law practitioners are not aware of blockchain technology, providing legality to cryptocurrency may not seem like a wise move at a glance. But this cries for the need of bringing in experts to adapt and understand the need of a newer technology rather than outrightly avoiding it. In order to comply with the foreign currency regulations, as well as continue to encourage innovative technology in Nepal, we should develop our own national cryptocurrency backed by the Nepali rupee.
The lawmakers need to focus on progressive and proactive policymaking. The government needs to be open to adapting new technology, and they need to bring in outside experts to help them create laws – there should be a wider public debate about Bitcoin and ride sharing apps and other similar controversies, unless Nepal wants to continue living in the 20th century.
Author: Anushka Joshi
No comments:
Post a Comment