Our research team has put up the recent developments by the Indian Government towards regulating the use of virtual currencies and bitcoin
Just hours after article on major Indian bitcoin exchanges shutting their bank transfers became viral, the ministry of finance has come up with its statement cautioning people against bitcoin usage.
Though govt. Of India has not yet classified the use of cryptocurrencies as illegal but it has raised serious concerns regarding transaction and payments made in cryptocurrencies/virtual currency. Earlier govt. Of India has come up with its warning for use of virtual currencies at multiple times this year.
The statement reads-
“The users, holders and traders of VCs have already been cautioned three times, in December, 2013, February, 2017 and December, 2017, by Reserve Bank of India about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to by investing in Bitcoin and/ or other VCs. “
The developments by Indian Govt. towards regulation of virtual currencies.
The first official warning came from Indian govt. Back in December 2013 when RBI issues a press release and there were following main concerns in this press release.
- The creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorized by any central bank or monetary authority.
- The press release clearly mentioned that there have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions.
- The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combat the financing of terrorism (AML/CFT) laws.
You can read the full press release here.
Owing to this statement major Indian crypto exchanges restructured their frameworks and introduced AML and KYC standards to their processes. But, this precaution was imposed only upon deposits and withdrawals for fiat currencies and not bitcoin or virtual currencies.
Meanwhile, the price and market valuation of bitcoin reached new heights. The price of Bitcoin hit $1000 in Jan 2017, this led to a huge rise in popularity and demand for this cryptocurrency in India and rest of the world.
Owing to these advancements the RBI came up with one more press release in January 2017. The RBI’s public release available on their website states:
“The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.”
In subsequent events, Chris Burnish (ARK’s Blockchain) posted a chart on the main cryptocurrencies exchange markets on Twitter and highlighted India’s growing role in the global market, with India accounting for 10% of Total trade in June.
The Govt. came up with another press release on December 5 stating it’s concerns for use of bitcoin and other cryptocurrencies. Here is the link
What’s the meaning of this statement?
Well, you might hear some rough titles after this release of this statement from the ministry of finance “Trading in crypto might lead to loss of money”- it simply means your investment is your risk and does not imply any risk to your funds or bank accounts.
which will be done to scare you. So before believing in any media hype please follow the links provided and read the official statement of Govt. and try to understand the main points that Govt. is raising.
CoinGape will soon come up with a list of precautions you can take and also ppossible regulations that can be imposed on crypto currencies in India. Till then just keep a track of your transactions and stay updated!
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Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com