From now on, if your clients ask about bitcoins tell them that the government has cautioned them not to invest in bitcoins.
In a press release issued today, the Ministry of Finance has cautioned investors against the risks in investing and trading in cryptocurrencies like bitcoin.
The govenrmetn said, “There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets and government fiat. The price of bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices.”
Terming bitcoin investment as a Ponzi scheme, the government warned investors saying that virtual currencies are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack which may also result in permanent loss of money. “Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes. As transactions of VCs are encrypted they are also likely being used to carry out illegal/subversive activities, such as terror funding, smuggling, drug trafficking and other money-laundering acts,” the statement cautioned.
Bitcoin is the world’s first and largest cryptocurrency.
Earlier, RBI has cautioned investors of VCs about the hazards of trading in cryptocurrencies. “ RBI has also clarified that it has not given any licence/ authorization to any entity/ company to operate such schemes or deal with Bitcoin or any virtual currency. 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,” said an earlier RBI circular.
