Bitcoin operators shut shop in India amid RBI warning

Comments 0
Bitcoin is a virtual currency that can be generated through complex computer software systems. Bitcoin is a virtual currency that can be generated through complex computer software systems.
SummaryRBI has warned against use of virtual currencies due to potential money laundering, cyber security risks.

trades which have been executed till December 26, 2013 will be processed completely.

"All pending orders will be cancelled and the deposits on those orders will be refunded 100 per cent to the users," it said.

Many other websites offering bitcoin services in India have gone down, although a few continue to operate as of now despite increasing regulatory glare on bitcoins globally.

While authorities and experts are becoming worried about its potential money laundering risks, concerns have also been raised about this new phenomenon snowballing into an 'e-ponzi' or an electronic version of investor fraud, given the growing promotion of bitcoin as investments without any enabling regulations for them.

According to a senior official said, pressure has increased on regulatory and enforcement agencies in India after latest moves by China and France on this front.

"The fact remains that regulators are scrambling for ways to regulate this entire gamut of digital currency, as it is a totally new concept in India and even the jurisdiction is not clear as yet on who should regulate them," he said.

While the US has declared that all prevailing money laundering laws would apply to bitcoins, China has asked its banks and other financial institutions not to deal in bitcoins and the public has been asked to do so at their own risk.

Besides, France last week warned its banks about risks related to bitcoins.

At the same time, the experts are also raising concerns about cyber security issues, given the huge scope of money laundering and other illegal activities through use of an unregulated digital currency concept.

Bitcoin came into existence in 2009 and the current number of bitcoin units generated so far stands at about 12 million. However, only a small number of bitcoins are being used for real commercial and retail purposes and a majority of transactions are happening for speculative investments.

Adding to the challenges before the regulators, this e-currency is already being accepted by some online retailers in countries like the US, China and a few others, for various purposes including pizza delivery.

Those looking at this new phenomenon include almost all financial sector regulators as also agencies mandated to handle economic crimes, such as RBI, Sebi and various agencies under the Finance Ministry, a senior official said.

While regulators are tight-lipped about their plan of action, a senior official said that one possible way forward can be following

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...