Bitcoins: RBI examining legal, security aspects of virtual currencies, says FM P. Chidambaram

Feb 11 2014, 19:24 IST
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At least 93 virtual currencies are at present being used by people across the world over the internet. Reuters At least 93 virtual currencies are at present being used by people across the world over the internet. Reuters
SummaryGovernment today said the Reserve Bank of India (RBI) is examining legal and security aspects of virtual currencies like bitcoins or litecoins.

Government today said the Reserve Bank of India (RBI) is examining legal and security aspects of virtual currencies like bitcoins or litecoins.

"The RBI is presently examining the issues associated with the usage, holding and trading of virtual currencies, including bitcoins, under the extant legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations," Finance Minister P Chidambaram said in a written reply in the Rajya Sabha.

The Reserve Bank of India (RBI) in last December had cautioned users, holders and traders of virtual currencies about potential financial, operational, legal, customer protection and security-related risks that they are exposing themselves to.

Chidambaram said the public at large has been informed that creation, trading or usage of virtual currencies as a medium of payment are not authorised by any central bank or monetary authority.

"No regulatory approvals, registration or authorisation has been obtained by entities concerned for carrying on such activities. As such, they may pose several risks to their users," the Finance Minister said.

At least 93 virtual currencies are at present being used by people across the world over the internet, as also for some offline transactions, and their total valuation has reached USD 13 billion (over Rs 80,000 crore), out of which bitcoin alone accounts for over USD nine billion, according to market estimates.

After RBI and other central banks across the world warned financial intermediaries about dealing with virtual currencies through traditional channels, the buzz around such denationalised currencies, which are not backed by any assets, had tempered for some time.

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