India: Bitcoin Warning

For the 2nd time this year, the Reserve Bank of India (RBI) has actually issued a public warning on cryptocurrencies as well as, specifically, bitcoin.

With a public notice on December 5th, India’s central bank has– once more– warned adopters (“users, holders as well as trader”) of cryptocurrencies like bitcoin regarding “potential economic, operational, financial, legal, consumer protection and also security related risks” in dealing with VCs (virtual currencies).

The RBI additionally stated its position of not licensing or authorizing “any kind of entity/company to operate such schemes or manage Bitcoin or any type of VC”, in a repeat of its caution from February this year. India’s central bank released its first caution against bitcoin in December 2013, informing adopters that the “creation, trading and usage” of bitcoin as a mode of payment had not been authorized by any kind of central bank or financial authority, at the time.

Unlike previous warnings, the latest public notice includes an alert regarding initial coin offerings (ICOs), a prominent new form of fundraising where companies raise funding in cryptocurrencies like bitcoin and Ethereum’s ether in exchange for their digital tokens.

The RBI’s latest caution comes at a time when Indian retail investors are rapidly taking on bitcoin, in spite of soaring premiums.

While bitcoin is not really officially recognized by authorities, it is not really ruled illegal either. The ambiguity– repeated warnings apart– has actually seen India’s Supreme Court call on the central government to provide clear guidelines “to regulate the circulation of Bitcoin” in the country.

In April, Indian authorities established the ‘Virtual Currency Committee’, an interdisciplinary working team of representatives from several Indian governmental ministries and banks to study as well as propose a regulatory structure for cryptocurrencies in India. The committee is believed to have actually submitted its report to Indian finance minister Arun Jaitley in August. The contents as well as subsequent judgment on the regulatory and also legal outcome of cryptocurrencies remain to be kept under wraps.

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