This was expected as China has already banned Bitcoin from financial transactions wherein it said that it can be used as a commodity, meaning it has limited use now. Similar guidelines were issued by Norway and then EU that it is not real money and any grievances from customers that they lost their Bitcoin during transaction or from a wallet won’t be entertained.
India has been following what others do, announced that Bitcoin and other similar digital currencies cannot be used as these pose significant risks to the users, holders and traders. The guideline issued by the Reserve Bank of India (RBI) warned the public against the use of virtual currencies like Bitcoin.
The statement from the central bank of India said that such instruments for financial transactions pose significant risks to the users, holders and traders as there are potential financial, operational, legal, customer protection and security-related risks. Thus, India is following the measures that have been adapted by Chinese and Norwegian governments wherein they have already issued warnings to Bitcoin users.
The RBI is of the opinion that decentralized digital currencies such as Bitcoin, Litecoin, BBQcoin and Dogecoin, etc. are not authorized by any central bank or monetary authority. Additionally, there have not been any regulatory approvals, registration or authorization obtained by the entities concerned for carrying on such activities.
The Reserve Bank of India to Examine Bitcoin
The advisory issued by the RBI also said that it is examining the issues associated with the use, holding and trading of these so-called currencies under existing legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations. Bitcoin which recently crossed the benchmark of $1200 became a hot trading assets, is facing a huge challenge world around as several countries have issued guidelines against their use.
A major risk that Bitcoin users face is that it is stored in digital media called electronic wallets provided by private third parties and at times Bitcoin exchanges and these are often prone to hacking, loss of password, compromise of access credentials or malware attack, etc. There is still no framework to address the issues arising from the loss of Bitcoin in India or for that matter anywhere.
The government seems to be worried about the emerging scenarios wherein Bitcoin customers get in touch with the government when they lose their digital currency. A lot of legalities would come up, particularly when Bitcoins are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org