NEW DELHI: The government on Friday cautioned investors to be wary of virtual currencies like Bitcoin, saying they are like Ponzi schemes and not using a felony gentle and coverage.
"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 stated in a observation.
VCs are stored in virtual/electronic format, making them vulnerable to hacking, loss of password, malware attack and so on. which may additionally lead to permanent loss of money, it stated.
Noting that there has been a ravishing build up in recent years in the cost of virtual currencies (VCs) together with Bitcoin, in India and globally, it stated, the VCs don't have any intrinsic value and aren't subsidized through any more or less assets.
"The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices," it stated.
Earlier within the day, Minister of State for Finance Pon Radhakrishanan within the Lok Sabha stated the Department of Economic Affairs had constituted an inter-disciplinary committee to inspect the existing global regulatory and felony buildings governing Bitcoin; suggest the framework for regulation of Bitcoin if among others and so on.
The committee has submitted its report which is under consideration of the federal government, the minister stated in a written reply to the Lok Sabha.
The Finance Ministry observation further stated that customers, holders and buyers of VCs have already been cautioned thrice through the Reserve Bank of India (RBI) concerning the doable monetary, operational, felony, customer coverage and safety related risks that they are exposing themselves to through investing in Bitcoin or different such currencies.
The RBI now and again has additionally clarified that it has no longer given any licence or authorisation to any entity to operate such schemes or deal with Bitcoin or any virtual currency, it stated.
Besides, it stated, the federal government or RBI has no longer accredited any VCs as a medium of alternate. Further, the federal government or every other regulator in India has no longer given licence to any agency for operating as alternate or every other more or less intermediary for any VC, it stated.
"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 therein," it stated.
As transactions of VCs are encrypted they are additionally most probably being used to hold out unlawful actions, such as terror- investment, smuggling, drug trafficking and different money- laundering acts, it added.
"VCs are not backed by government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as 'Coins'," it stated.
There is, on the other hand, no physical attribute to those cash, it stated, adding, persons dealing in them will have to imagine those info and watch out for the risks desirous about dealing in VCs.
"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 stated in a observation.
VCs are stored in virtual/electronic format, making them vulnerable to hacking, loss of password, malware attack and so on. which may additionally lead to permanent loss of money, it stated.
Noting that there has been a ravishing build up in recent years in the cost of virtual currencies (VCs) together with Bitcoin, in India and globally, it stated, the VCs don't have any intrinsic value and aren't subsidized through any more or less assets.
"The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices," it stated.
Earlier within the day, Minister of State for Finance Pon Radhakrishanan within the Lok Sabha stated the Department of Economic Affairs had constituted an inter-disciplinary committee to inspect the existing global regulatory and felony buildings governing Bitcoin; suggest the framework for regulation of Bitcoin if among others and so on.
The committee has submitted its report which is under consideration of the federal government, the minister stated in a written reply to the Lok Sabha.
The Finance Ministry observation further stated that customers, holders and buyers of VCs have already been cautioned thrice through the Reserve Bank of India (RBI) concerning the doable monetary, operational, felony, customer coverage and safety related risks that they are exposing themselves to through investing in Bitcoin or different such currencies.
The RBI now and again has additionally clarified that it has no longer given any licence or authorisation to any entity to operate such schemes or deal with Bitcoin or any virtual currency, it stated.
Besides, it stated, the federal government or RBI has no longer accredited any VCs as a medium of alternate. Further, the federal government or every other regulator in India has no longer given licence to any agency for operating as alternate or every other more or less intermediary for any VC, it stated.
"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 therein," it stated.
As transactions of VCs are encrypted they are additionally most probably being used to hold out unlawful actions, such as terror- investment, smuggling, drug trafficking and different money- laundering acts, it added.
"VCs are not backed by government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as 'Coins'," it stated.
There is, on the other hand, no physical attribute to those cash, it stated, adding, persons dealing in them will have to imagine those info and watch out for the risks desirous about dealing in VCs.
Bitcoin, other virtual currencies like Ponzi schemes: Finance Ministry warns investors
![Bitcoin, other virtual currencies like Ponzi schemes: Finance Ministry warns investors]()
Reviewed by Kailash
on
December 29, 2017
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