The finance minister Arun Jaitley has issued a fresh warning to Bitcoin investors. While replying to a query raised by DMK MP Kanimozhi during the Question Hour in the Rajya Sabha, the finance minister once again reiterated that cryptocurrencies like Bitcoin are not legal, lawful tender.
Kanimozhi sought to know how the government was planning to regulate crypto-currencies like Bitcoin and Ethereum, as India reportedly “accounts for more than 11%” of such trade globally”.
Cryptocurrencies such as Bitcoin and Ethereum are not legal tenders –
FM Arun Jaitley said that both the Reserve Bank of India (RBI) and the government of India have consistently maintained and made it public that cryptocurrencies are not “legal, lawful tender” in India.
“It is operating online. There have been expert groups which have been set up to see how to deal with this situation. But this is not legal tender. From 2013 to 2017, this has consistently been the position of both the Central bank and the government,” he said.
No protection available to those using or dealing with them in India –
There is no protection available to anyone using or dealing in cryptocurrencies like Bitcoin, Ethereum and others in the country.
Jaitley said that an inter-departmental committee was set up in the year 2016 to examine the risks posed by cryptocurrencies.
It decided that people engaged in this activity be warned that there is no lawful protection and this has been done accordingly.
Bitcoin is also used for illegal activities –
The FM also accepted that the lack of dependence on the state has made cryptocurrency function with a certain amount of anonymity.
Also, as transactions are encrypted they are also being used to carry out terror-funding, drug trafficking and other illegal/subversive activities.
In fact, in many ransomware attacks of the recent past, the hackers asked for the ransom in the form of Bitcoins as tracking their recipient is almost impossible.
Price of Bitcoin and other cryptocurrencies entirely speculative –
In a statement issued late last month, the finance ministry said, “The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices.”
Bitcoins can be as dangerous as Ponzi schemes –
The finance ministry’s statement further warned investors that Bitcoins and other cryptocurrencies can be as dangerous as Ponzi schemes.
“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,” warned ministry’s statement.
No company or authority has been given the licence to operate in Bitcoins or other cryptocurrencies –
The RBI has also clarified that it has not given any licence/authorization to any entity/company to deal with Bitcoins or any other cryptocurrencies.
“The government also makes it clear that VCs are not legal tender and such VCs don’t 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 therein.” It said.
There are 785 virtual currencies in operation globally –
The FM said that there are as many as 785 virtual currencies operating across the World currently. The huge number further makes the task of regulation difficult.
11 online exchanges have been identified in India –
As for India, the finance minister said, “There are about 11 online exchanges which have been identified in India.”