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Govt to Take Precautions Against Virtual Currencies Like Bitcoin, Says Jaitley in Rajya Sabha

The government on December 29 had cautioned investors to be wary of virtual currencies like Bitcoin, saying they are like Ponzi schemes with no legal tender and protection.

Rounak Kumar Gunjan | News18.com

Updated:January 2, 2018, 3:07 PM IST
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Govt to Take Precautions Against Virtual Currencies Like Bitcoin, Says Jaitley in Rajya Sabha
File image of Finance Minister Arun Jaitley speaking in Rajya Sabha.
In an effort to stabilise the craze for cryptocurrencies such as Bitcoins in India, Finance Minister Arun Jaitley speaking in the Rajya Sabha has clarified once again government’s stand saying that they have decided to take precautions against cryptocurrencies.

“It functions within the virtual community. There are 785 virtual currencies which are in use. There was an inter-departmental committee that decided certain precautions to be taken. There is an expert group on this,” said Jaitley.

In India, there are 11 cryptocurrency trading exchanges identified by the government.

The government on December 29 had cautioned investors to be wary of virtual currencies like Bitcoin, saying they are like Ponzi schemes with no legal tender and protection.

“There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes,” the Finance Ministry had said in a statement.

The government or Reserve Bank of India has not authorised any virtual currency (VC) as a medium of exchange. Further, the Government or any other regulator in India has not given licence to any agency for working as an exchange or any other kind of intermediary for any VC. Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs.

The users, holders and traders of VCs have already been cautioned three times, in December 2013, February 2017 and December, 2017, by Reserve Bank of India about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to by investing in Bitcoin and/ or other VCs.

RBI has also clarified that it has not given any licence/ authorisation to any entity/ company to operate such schemes or deal with Bitcoin or any virtual currency. The government also makes it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India. The investors and other participants, therefore, deal with these VCs entirely at their risk and should best avoid participating in them.

Seasoned investors from India and around the world have time and again cautioned investors to stay away from it. Thomas Carper, a senior United States Senator, once remarked, “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”

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| Edited by: Puja Menon
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