No Crypto Ban In India – But Exercise Caution : Interview with N S Nappinai (All Interviews)

Ms. Nappinai, a renowned lawyer, specializing in constitutional, criminal, IPR and cyber laws also has a passion for legal aspects of Blockchain and emerging technologies. In this interview, she expresses her thoughts about the recent Supreme Court decision impacting Crypto and Crypto Exchanges. Ms. Nappinai gives also some insight into Laws and Regulation, and the generational gap existing with respect to new inventions and crypto in India today. Take a look at what this power-woman advocate working since 1991 in India has to say about crypto today.

N S Nappinai

Interview Date :12th March 2020    

N S Nappinai (All Interviews)

The Indian Woman behind Cyber Law

I am N. S. Nappinai, I am an advocate practicing in India. I focus primarily on litigation in the Supreme Court and in the Bombay High Court. I specialize inter alia in Cyber Laws and Constitutional law, and I have been a forerunner in terms of not just my practice or speaking, but also training judiciary and police and writing about blockchain and cryptocurrency ( I have recently launched my initiative titled “cyber Saathi” (translating to “cyber friend”) for empowering through knowledge of cyber laws (

N S Nappinai

A woman advocate specializing in Indian cyber law is a rare sight even today, but my gender I believe is irrelevant to the stream of practice I chose to specialize in. Let me tell you, I think I have been a disrupter, always. I started practice in 1991 as a criminal lawyer, and in 1991 a woman as a criminal lawyer was also mostly unheard of. At that time, I specialized in litigating white collar offenses, and intellectual property rights (“IPR”) cases. I was handling a lot of IPR cases pertaining to software license etc., in 1994~95. That’s when my curiosity about something beyond IPR and more about Information Technology came up. I started reading about data protection – that was also when the world started moving towards strong data protection regimes. We started getting models laws for e-commerce, electronic signatures, and so on, so that was also the time when cyber laws were actually evolving. I was therefore ahead of times in reading and becoming an expert in cyber laws before India received its first codified cyber law in 2000. I started way ahead of the crowd, and that I am a woman is just incidental.

No Crypto ban in India till date. Let me explain:

There was no ban on cryptocurrency in India. What happened was, in 2013 there were circulars issued by the Reserve bank of India (“RBI”), which is the Indian central bank, that cautioned people about dabbling in cryptocurrency. The circulars moved from its usage of cryptocurrency to virtual currencies sometime in 2017. On 6th April 2018, RBI issued a circular that was only a restriction on banks and payment systems from transacting on cryptocurrency. If you were involved in the field of cryptocurrency, you could no longer use banking systems or payment systems to dabble in it. That was what RBI did. 

Once you restrict the usage of the banking system for crypto transactions, you can effectively restrict people from transacting in cryptocurrencies. The exchanges were then left only with the option of undertaking crypto to crypto transactions or crypto to cash transactions. There was no other way you could deal with it and exchanges were not really encouraging cash transactions, thus it brought them to a standstill, which caused this whole scenario of people assuming there was a ban on cryptocurrencies in India, which was incorrect. In a way, this is a ground on which the supreme court also decided in 4th March’s decision on why the RBI circular was disproportionate. It struck down all the other arguments, but only upheld this one aspect which was that this circular was excessive, or disproportionate to the harm and the damage that this circular was purportedly attempting to protect against. The supreme court felt that it was disproportionate, and therefore it was struck down.

We cannot assume that it is all rosy and wonderful with respect to cryptocurrencies or even blockchain in India because the Supreme Court struck down the RBI circular. I have just written an article that is published now online on Supreme Court’s judgment impacting cryptocurrency.

My cautioning note here is that people should wait and watch  because the very judgment gives RBI a clear mandate to decide the future of cryptocurrencies in India. Apart from that, the Government would also have to decide on how it wants to go forward with cryptocurrency. So, India is in a state of flux where you need to see what RBI will come up with next, and what the Government will do. We cannot assume that it is celebration time for cryptocurrencies.

Another aspect would be the weakness in terms of the judgment itself where RBI has a very strong ground for review. If RBI decides to go for a review, which it already said it’s going to take that position, they would most probably also ask for a stay of the order till the decision on the review has been taken. Their argument would be that, banks have not done anything on this since April 2018, so if they were to start again and the review is in favor of RBI, the absence of a stay would have an impact on banks and payments systems. Their chances of succeeding in obtaining a stay of the order is therefore high. I would say that it is best that we wait and watch at least until the review period is over, and then take a decision on what next. Of course, nothing stops RBI to go ahead with new circulars, or of the government to take the definitive stand on law any time.

“I Always Wish India would Lead”

There were two government committees that were formed to decide on what to do with cryptocurrency. The first committee was for regulation, that’s why they suggested a crypto asset bill. The second committee said “just ban it all”, and in fact the proposed legislation was called “Banning of Cryptocurrency Act” The government today has two conflicting reports, and they have a lot of material that is already put together in terms of where the world is going in respect to cryptocurrency. The real issue with the government today is in taking a decision on the following items;

  1. Should cryptocurrency be allowed?
  2. If yes, whether cryptocurrency is or should be a payments system?
  3. Whether it is or should be treated as a commodity?
  4. Whether cryptocurrency exchanges should or will be regulated by a securities regulator, as Singapore and to a large extent Japan and America have done?
  5. How can the Government encourage and give confidence to the blockchain industry?

In deciding on these issues, I would say that India is in a good position with a lot of precedents to follow from across the Globe. I always wish India would lead on all these aspects, because we are right out there and in the top when it comes to IT, so why not lead from the front? However, in the present situation we are in a position where we already have many options to follow or adapt from around the world. They also have the examples which are closer to home where cryptocurrency had been restricted in its entirety. My submission which was before the first government committee, was to the effect that a ban may be very myopic. I also stated that we may be better off with regulation. Furthermore, I had advocated regulating through exchanges as my whole argument was that regulation, plus doing it through exchanges, will actually strengthen India’s hands with respect to enforcement against misuse or violations using cryptocurrencies. 

This was based on the following ground; cryptocurrency being a virtual asset, it is going to be next to impossible for governments to monitor its presence or its usage. Apart from that, any methodology for verifying its presence on devices would be completely intrusive. Transactions in crypto can just go underground the minute you ban it, and it is still going to be there open to misuse. All these issues that are raising with respect to how cryptocurrency can be used or misused, can also be done with fiat currency also. Crimes and money laundering can happen with fiat currency, so these are not issues that are restricted only to cryptocurrencies. The only real issue according to me appears to be the threat to the Sovereign right of a Nation. The use of cryptocurrency as a payment system, appears to violate this Sovereign right and is therefore likely to always face opposition. 

The one main issue, which I totally agree with the government on is, cryptocurrency is not legal tender and it can never be legal tender. Thus, we have to protect our Sovereign rights and also ensure awareness amongst users through regulation. It is very important to let everybody know explicitly that it is not legal tender. Explain what it is, and to what extent it can be used, because you are not going to be able to stop the young generation from dabbling into something that is new, and that appeals to them. The minute you appeal to a youngster “here is a product which says no central authority” the youngster will be like “no authority? wow I love it!”

 “I may not be able to build a car, but…”

I don’t know what it is that intrigues me about technology, but I am very passionate about this field of law including with respect to blockchain technology and other emerging technological inventions. However, I have to clarify myself in that, I am more of a specialist in technology laws, and not technology itself. If you would ask me “what is the difference between you and other lawyers” I would say that the distinction is in the underlying understanding of how technology works. I always put it this way “I may not be able to build a car, but I know what goes into the car and I know how to drive it”. So that’s where I come in, in respect to technology.

With regard to blockchain and crypto, I have been addressing these subjects in my training sessions for judges and police for a very long time, when it was very new to the world. This was still the time when cryptocurrency and blockchain were something that most people couldn’t comprehend, but I was out there speaking about it and trying to bring a little clarity to the scenario. I wouldn’t say that I am passionate about cryptocurrency, but I am fascinated by how blockchain has evolved. I hope that we are able to overcome the early days of resistance in figuring out how the technology can grow from here on.

We cannot apply Online rules to Offline Real World

I have heard a crypto evangelist talk about how your entire life can run without a footprint in the real world. You may claim all of this, but at the end of the day, each of us as human beings who are dabbling in technology are anchored to the real world. As much as we want to say that we don’t live in this world, and we don’t need regulation, but when you shut your computer and step out on the road, don’t you need your government to protect you physically? If the same anarchy that you want online were to exist offline, where would you as a human being be? I wonder why we are averse to regulation, and so averse to central authority when it is the same authority or regulation that we turn to when it comes to protecting our physical self.

If Crypto becomes a new payment method, Fiat will be Abandoned

The RBI and the government were probably not that concerned of the decentralization aspect, as they were of the fact that if cryptocurrency can be used as a payment system, then it is actually a threat to fiat currency. Moreover, issuance, regulation and control of currency which is a sovereign right can also be threatened. It is not about the decentralized part, but about the manner of usage of cryptocurrency. If cryptocurrency is going to be used as a payment mechanism, then in just a year or 2, fiat currency will be abandoned and there will be no value to the fiat currency. It is a legitimate concern that governments have. If cryptocurrency can threaten their sovereignty, then they need to decide on whether they should allow it or not in, and in what context. Today, when you look at the global trends, all the jurisdictions which allow cryptocurrency effectively have taken away this risk factor of threatening the sovereignty of their country. They made sure to allocate or push away cryptocurrency into the realm of securities instead of payment systems, and as a security or utility token, they can relax as it is not imposing a threat to their sovereignty. Nevertheless, they are not missing the boom on this new evolution, technology and this new opportunity which the youngsters seem to love.

3 Types of crypto groups in India now

I have not noticed an immediate jump up from anyone going to the government saying “let’s get started”. I think everybody is waiting and watching in India. Another thing that happened during the ban period was that a lot of exchanges moved out of the country because they couldn’t function in India without the important access to a banking or payment system. There were 3 different types of crypto groups; those who were already invested in cryptocurrency, those who were already traders in cryptocurrency and not necessarily exchanges but taking benefits from exchanges that were based out of India, and lastly there are the exchanges who may or may not have moved out. So, today when we are talking about a reversal to the position before the issuance of the circular on April 6th 2018, it is going to take a bit of time, because these people need to apply for revival of their connections. Banks and payment systems are also going to do a “wait and watch”. They are not going to immediately sanction everything, and they will go through a process as well as wait and see if RBI is indeed going to go forward with the review or not, Or if any new circular is going to come up.

Protection Remedy has to be Available

One of the arguments that I had put forward for regulating cryptocurrency was high hack risk and huge losses. In India particularly, on one hand there was the issue of whether the public could invest in cryptocurrencies or not, on the other hand there were crimes pertaining to cryptocurrency. There are numerous incidents where a crypto wallet has been hacked and was cleaned out, or an exchange has been hacked and cleaned out. There were also scams in the name of blockchain or even cryptocurrency. You have to be able to give protection to the users or the public that have invested, and there has to be a remedy that has to be available to them. General laws provide user protection remedies to a large extent but there is still fear in the minds of crypto enthusiasts particularly because of all the RBI circulars warning them. Hence scams go unpunished and investors are left without remedies for redress. In such instances, it is imperative that victims have remedies in law and the confidence in the system to seek such remedies. For such cases as well as others pertaining to emerging technologies there are remedies under special and general laws already existing. For instance, in India we have the Information Technology Act, 2000, which was the first codified cyber law but that is not the only cyber law in India. I call the cyber laws for India a scattered jigsaw puzzle, because a little of it is in a certain act and a little bit is in the general laws. We need to put the puzzle together to know what the full picture of the law was all about. That’s what I attempted to do in my book on cyber laws and tech laws titled “Technology Laws Decoded” ( and I want people to know that you can take resort to existing laws that are there for your protection.

Be clear in whatever you decide!

Once people know that dabbling into cryptocurrency by itself is not wrong, then they will have confidence to come forward to file cases if they fall victim to fraud, scams or hacking attacks. Today, everybody who has dabbled into cryptocurrency seems to think that they are in the gray area. They don’t know where they stand with respect to the law and they don’t know that by filing a complaint, if the law is going to go after them or the criminal. That’s why we need clarity and certainty in law with respect to cryptocurrency. If the government wants to say “no sorry, ban it all, off with their head” so be it, but say it so that the public at least knows where they stand. Otherwise, please regulate and give some confidence to the market, especially to blockchain enthusiasts who should know that they can move forward including for an incentivized mechanism. Blockchain adaptation will grow and flourish in India only if the government ensures clarity and encourages and enables its growth.

KYC systems to be ramped up for banking systems also

Anonymity as opposed to traceability, is the understanding that most people have of cryptocurrency. They think it provides anonymity, but it actually provides traceability. There may be anonymity with respect to the individual’s personal information i.e., those who are behind the transactions, but not the transaction itself. It is the traceability of transactions that enables the decentralized system to function through validation of each transfer. When we talk about traceability, then we are explicitly talking about not just the transaction, but of the persons behind it at the same. If you allow cryptocurrency exchanges, then they effectively remove the anonymity layer. You already have traceability with respect to cryptocurrency, and when an organization is doing your full KYC, then anonymity of the persons behind a transaction also goes with that. So, effectively you have the same transparency as you would have in fiat currency transactions through banking systems.

In fact, I would say that banking systems have not been as effective as we would like them to be on traceability considering the number of scams that are here in India tagged under phishing attacks. Most banking or credit/debit card and even digital wallet frauds launder out money using another bank account. Why is the money trail not leading to the criminal then if the KYC of a banking system is working in such situations is a good question to ask, because it’s not really working to the extent that we would want to. There are no perfect systems, and we will have to evolve as threat scenarios come up. We need more awareness and digital literacy among users and transparency and easily accessible remedies against such frauds and scams. I feel that when it comes to cryptocurrency and traceability, the crypto enthusiast will not want traceability beyond what is already there. This is the dilemma here. They like their anonymity. The argument which I am putting forward is that you need regulation and it is good for the community even if this may not necessarily be attractive to a crypto enthusiast.

India is a Nation of Full of Youngsters

India is a nation of youngsters, and we are probably one of the youngest Nations. Comparing the culture of Indian job hunting to that of present-day Japan, many new university graduates are in search of a job at various companies and try to create a stable life. In contrast, young Indians prefer to become entrepreneurs. They prefer to make a living by themselves and are more willing to take risks and take a chance of creating a business of their own, even if it is a small company. The Japanese perspective of becoming stable by finding a job at a company was the scenario in which I grew up back in the day.

In my time in India, people would always go to find a job as it was safer rather than trying something new. I was, I guess in a way, a millennial as well because I always went for something different. I was never happy with just going with the safe bet. This is just the start-up scenario in India, and I think it is very encouraging. For me, as a professional who comes from an older generation than the millennial, I have been doing a lot of advisory and mentoring work for start-ups, not just now but from a long time back. I think that the millennials are happy to experiment because their risk-taking proportion is much higher. They much rather would like to be their masters than working for somebody else.

People’s Reaction to Crypto around You

Whenever I address government officials or police, effectively, these are the people in authority, and their immediate reaction is resistance and rejection. As humans, we do not like something which we do not understand. Now there is a lot more understanding, and yet there is a lot of fear. So the typical reaction that comes forth is “let us play safe”. This goes back to what we spoke about Japanese people’s preference for stable jobs, which was the same as my time when I was growing up in India and the rebellious youngsters in present India. The youngsters are very enthusiastic about it, and we would have very long debates about why we need regulations. However, as they would hear me out, they usually feel convinced.

Middle-aged people are very interesting. Some of my contemporaries would want to dabble in this field only to show how cool they were. This is only to show that they somehow still belong to the millennial category but they do so with a lot of fear and caution in trying out or becoming adventurous into this field as opposed to the completely casual attitude and risk-taking millennials.

Millennials do not understand risk, and they are willing to go forward and explore. They are willing to go forward, not because they want to show how cool they are, but to experiment with something new. They are willing to go forward because this is something that they connect with, and they are willing to be part of the ecosystem, whereas the middle-aged are trying to show that they can be part of this ecosystem.

I think that is where a little bit of regulation could balance out for both parties. This way, it gives confidence to the older generation that can dabble in something that they can go into as a mechanism or a process independent of short bursts of interest, and the millennials can get some protection whether they want it or not.

Young people feel “Regulation will mean Death of the System”

Young people’s narrative is what is getting them into trouble. The first issue is that they do not want traceability and they like their anonymity. They do not want regulation because they like this un-regulated system, even with the risks that are there in crypto such as hacking, etc. The crypto enthusiast still feels like they are better off without governments getting into the picture as they are yet willing to take the risk even with respect to volatility in the market.

They would rather do that than allow governments into this field and regulate it because young people feel that regulation will mean the death of the system. On the other hand, we are talking about things that can help the cryptosystem when regulation comes into play. It is the same problem in terms of what demographics are involved, and what their understanding of regulation is. They carry a young rebellious attitude towards any form of restraint and their rights. It is like an entitlement scenario where I am already entitled; by allowing you to regulate me, I allow you to restrain me, so why would I want to be restricted?

We need to take a pause, and the system and users have to mature. From the government’s side, there should be maturity in understanding that a product has come up, and they cannot just shy away from it or wish it away. They cannot put their head into the sand and say “I do not like this product and want it to disappear”. They have to acknowledge that it exists and figure out methodologies on how they want to deal with its existence.

The crypto world has to mature as well in understanding that they cannot have the world at their favor, and need the governments. They are better off with governments functioning effectively, and they need a good and stable fiscal system, or else, they most probably will not survive. Given this scenario, giving up a little bit of this anarchic freedom to a soft-touch regulation or a regulation that gives them stability, will benefit the crypto world.

Blockchain per se has never Suffered as a Technology

The government has always been supportive of blockchain technology. They wanted to ensure that whatever the circular stated should not affect the blockchain ecosystem. The government, therefore, clarified that they were not against “blockchain”. Many state governments in India, and to some extent the central government as well, have adapted blockchain into its governance mechanisms. Therefore, blockchain per se has never suffered as a technology.

The problem lies in terms of much broader use of blockchain, and especially the incentivized blockchain. An incentive is any design element of a system that, without any government involvement, influences the behavior of system participants by changing the relative costs and benefits of choices those participants may make. From miner rewards to transaction fee-setting mechanisms to token curated registries, to prediction markets, incentives are everywhere in blockchain platforms. But, the question would be, how do you incentivize beyond cash? How do you incentivize in a non-permission blockchain ecosystem? Those have not evolved yet.

Finally, everybody needs to take a look at the technology underlying the product, which is blockchain. If the world wants to encourage blockchain technology, it needs to deal with cryptocurrency and blockchain separately and not combine the two. Today we have seen the millions of dollars that are being pumped into blockchain technology evolution, we have seen governments adopt it and accept it, and yet there has been a slump in the market. Why is that slump there? Because of the uncertainty in the market to permissibility or otherwise of various structures of blockchain systems. While permission blockchains functioning within controlled environments can and are succeeding, incentivized non-permissioned blockchain use cases are struggling with legal issues.


Ms. N. S. Nappinai, Supreme Court Advocate and founder of Cyber Saathi, is a senior and renowned lawyer with over 29 years of experience, specializing in Constitutional, Criminal, IPR and cyberlaws. She also is an adviser for removal of child sexual abuse material and violent videos of offences against women from online platforms.

Interviewer , Editor : Lina Kamada



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