Bitcoins like Ponzi schemes, Invest in Bitcoins at your Own Risk: Finance Ministry warns users
Tags: Bitcoins, Bitcoin, Invest, Legal, ban, India
Hello friends,
Are you interested in Bitcoins? Want to invest in bitcoins? Before going further read this post.
The government on Friday cautioned people against the risk of virtual currencies(VC), saying they are not legal tender and do not have any regulatory permission or protection in India.
Investing in virtual currencies such as bitcoin, ripple, and ethereum, comparing them with pyramid schemes, reminding that these were not legal tender and lacked any regulatory permission or protection.
"These are also not legal tender. Hence, virtual currencies are not currencies. These are also being described as 'coins'. There is, however, no physical attribute to these coins," a government statement said.
The warning comes as Indian companies associated with the trade in the virtual currency such as Unocoin, Global DCX, and Coinsecure field queries looking to take advantage of bitcoin's ride. All of them are looking to step up hiring in anticipation of an increase in business.
"Therefore, virtual 'currencies' (VCs) are neither currencies nor coins. The government or RBI has not authorized any VCs as a medium of exchange. Further, the government or any other regulator in India has not given license to any agency for working as an exchange or any other kind of intermediary for any VC," it added.
"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," the statement said. "Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes," it added.
Because of they 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.
"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 added. "Persons dealing in them must consider these facts and beware of risks involved in dealing in VCs."
RBI has also clarified that it has not given any licence/authorisation to any entity or 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
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