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Crypto Awareness Campaign

Context: The Union Government is set to launch an outreach programme to create awareness about cryptocurrencies and online gaming.

Crypto Awareness Campaign News

  • The Investor Protection and Education Fund (IPEF), which falls under the Ministry of Corporate Affairs, will launch an outreach campaign.
  • The programme will educate people about the risks associated with crypto assets.

What is Investor Education and Protection Fund (IEPF)?

  • IEPF is managed by the IEPF Authority, which was set up in 2016 under the provisions of the Companies Act, 2013.
  • The functions of the IEPF are:
    • Administration of the IEPF
    • Promoting awareness among investors,
    • Makes refunds of shares, unclaimed dividends, matured deposits and debentures to rightful claimants.
  • The investment education aims to teach basics to household investors, housewives and professionals alike in rural and urban areas.
  •  Focus areas include:
    •  Primary and secondary capital markets
    •  Saving instruments, instruments for investment (such as mutual funds, equity, among others)
    •  Making investors aware of dubious Ponzi and chit fund schemes and existing grievance redressal mechanisms, among other things.
  • Till October 2022, it had conducted more than 65,000 awareness programmes covering 30 lakh citizens.


Ponzi and Chit Fund Schemes

  • Ponzi scheme: It is an investment fraud that pays existing investors with funds collected from new investors.
    • Ponzi scheme organizers often promise to invest subscriber’s money and generate high returns with little or no risk.
    • But the fraudsters do not invest the money and instead use it to pay those who invested earlier and may keep some for themselves.
    • Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme.
  • Chit Fund: A chit fund is both a savings and credit product.
    • It bears a pre-determined value and is of a fixed duration, mostly two to three years.
    • Each scheme admits a specific number of members whose monthly contributions adds up to the total value of the chit fund at the end of the term.


Need for Outreach Crypto Awareness Campaign

  • Unregulated currency: Crypto is an unregulated currency having a destabilising effect on the monetary and fiscal stability of a country.
  • Unlawful Activities: There is a fear that Crypto exchanges in India are involved in unlawful practices as drug trafficking, money laundering, violating foreign exchange legislation and evasion of GST.
  • Legislation: The Reserve Bank of India has recommended framing legislation on the crypto sector.
    • According to the RBI, cryptocurrencies should be prohibited.
  • Volatility: Investing in Cryptocurrency can be a complex and risky endeavour as it is extremely volatile and works round the clock.
    • Hence, it is important for potential investors to thoroughly educate themselves before making any decision.
  • Investments: The programme will focus on the discouragement of ongoing investments in crypto by many micro and small investors in the nation.
  • Gambling: The campaign will also focus on the opportunities that allow people to make extra money such as gambling.


About Online Gaming

  • Nodal Agency:  The Ministry of Electronics and Information Technology has been appointed the nodal industry for Online Gaming in India.
    • A proposed framework for Central regulation by MeitY is expected to address issues in online gaming.
  • Problems: Awareness about online gaming is needed as:
    • It poses a risk of Cybercrimes.
    • Playing online games leads to a serious gaming addiction which has been considered as a gaming disorder.
    • Clicking links, images and pop-ups in websites may contain a virus and harm the computer, and may contain age-inappropriate content.
    • It could also lead to loss of personal data and information.
    • There is confusion about the definitions of a ‘game of chance’ and ‘game of skill’.


Way Forward

  • Regulation: Apart from the outreach programme, there has to be a regulatory mechanism for the crypto sector.
    • People may presume incorrectly that it is illegal.
  • Right Message: If the government takes a heavy-handed approach and starts saying things like virtual currency is not legal in India that will not be entirely true. It has to convince investors of the potential risks.
  • International collaboration: It has been stated that crypto assets are borderless.
    • Any legislation for regulation or for banning would require international collaboration to prevent regulatory arbitrage.
    • The collaboration must entail an evaluation of risks and benefits and evolution of common taxonomy and standards.


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