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’.
- 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.