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This Is What Government Regulators Said On Bitcoins, Digital Currencies

A recent crackdown on cryptocurrencies came from the finance ministry on December 29 when it likened the bitcoins to ponzi schemes.

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This Is What Government Regulators Said On Bitcoins, Digital Currencies

Finance Minister Arun Jaitley on recently said that bitcoins are not legal tender in India

The finance ministry, Union minister Arun Jaitley and Reserve Bank of India (RBI) have warned the bitcoin traders on numerous occasions, apprising them of the risks they expose themselves to. Jaitley has even said that cryptocurrency is not legalised as of now, while the RBI has made it clear multiple times that the creation, trading or usage of all virtual currencies, including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. A recent crackdown came from the finance ministry on December 29 when it likened the bitcoins to ponzi schemes.

Following this, Union Finance Minister Arun Jaitley on Tuesday (January 2) said that bitcoins or such crypto-currencies are not legal tender, while several members expressed concerns over trading on these platforms. During the Question Hour in Rajya Sabha, DMK member Kanimozhi wanted to know whether the government was considering regulating crypto-currencies such as bitcoin and ethereum. Arun Jaitley emphasised that the Centre's position was consistent that such currencies were not legal tender.Arun Jaitley told the parliament, "The government is examining the matter. A committee under the chairmanship of secretary, department of economic affairs, is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken."

Ten strong words of caution made by regulators against Bitcoins

 

1. The Reserve Bank of India on December 24, 2013 cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.

2. The Reserve Bank has mentioned that it has been looking at the developments relating to certain electronic records claimed to be "Decentralised Digital Currency" or "Virtual Currency" (VCs), such as, Bitcoins, litecoins, dogecoins etc, their usage or trading in the country and the various media reports in this regard.

3. The RBI said the creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users, including the following:

4. On February 1, 2017, RBI again warned investors that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.

5. The RBI, on December 5, 2017, RBI again asserted the concerns conveyed in the earlier press releases in the wake of significant spurt in the valuation of many VCs and rapid growth in Initial Coin Offerings (ICOs). The RBI cautioned users, holders and traders of bitcoins regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such VCs.

6. On November 30, 2017 Arun Jaitley said that recommendations are being worked at. The government's position is clear, we don't recognise this as legal currency as of now," Jaitley said when asked whether the government has taken any decision on crypto currency.

7. Arun Jaitley on June 27 held an inter-ministerial meeting to examine risks related to virtual currencies such as bitcoins. Although several issues concerning bitcoins were discussed, no decision was taken.

8. Sebi chairman Ajay Tyagi on December 20 said "Blockchain technology that everyone uses and is useful, should not have regulatory oversight and that's something which needs to be encouraged and we are also encouraging it," he said.

9. On December 19, income tax department sent notices to high net worth individuals for suspected tax evasion. The income tax department had categorically asked for details of investment and sales of bitcoins and other cryptocurrencies in India and abroad between November 1 2016 and 31 December 2016.

10. The finance ministry on December 29 cautioned investors about the risks of trading in cryptocurrencies such as bitcoin, saying digital currency investments are like Ponzi schemes. Investors and other participants dealing with such digital currencies are doing so "entirely at their risk and should best avoid participating therein," the statement said. "There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes", with investors risking a sudden and prolonged crash, the statement said.

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