In order to make people aware about the consequences of using virtual currency, Indian Finance Minister Arun Jaitley recently clarified that as of today there is no law in circulation on the use of the popular bitcoin or any similar cryptocurrencies in the Indian subcontinent. He further highlighted that users using such currencies in their day-to-day lives must know that in case they incur some damage or face a fraud situation during these bitcoin/virtual currencies transaction, they won’t have any legal recourse to their aid in India.
However, Jaitley did clarify that even though today there’s no law, the government is working on coming up with some regulations for virtual currencies seeing the increasing interest of people in the country. He added that the government has in fact already got a committee in order that is currently working on coming up with suggestions for a regulatory framework to address this popular new form of value exchange.
“At present, there are no regulations governing VCs including Bitcoin (BTC) in India,” the minister said yesterday. He further added,“The Reserve Bank of India has not given any license or authorization to any entity or company to operate such schemes or deal with Bitcoin or any virtual currency.”
The government has time and again warned the consumers about being cautious when dealing with virtual currencies. In February this year, RBI issued its latest notice against cryptocurrencies that read, “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.” As a result of a recent RBI warning, many
India-focused online bitcoin exchanges decided to shut down their shops for good.
As of the last update received on the working of the committee, the talks had hit a standstill due to a difference of opinion between the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) regarding the nature of categorisation of the cryptocurrency. The matter was uncovered during a finance ministry organised stakeholder meeting last month to discuss the regulatory framework of the virtual currency in the country (Read Here).
While RBI considers Bitcoins as a security matter and wants SEBI to take charge to regulate it as commodity derivative in the same way as Gold and Silver, SEBI has conflicting views to offer and doesn’t agree with RBI’s interpretation of Bitcoins. According to SEBI, without the presence of any proper legal terminology and other legal gray areas surrounding the cryptocurrency, they cannot consider it as a commodity.
Prior to this, the committee’s working was interpreted when a suggestion was made regarding pursuing a blanket ban on all virtual currencies. But, eventually the proposal was dropped.
For people wondering why do we need to regulate bitcoin/virtual currencies, here’s the answer. Unlike other forms of currencies such as gift coupons or e-wallets, cryptocurrencies do not need a central authority to keep a record of who has how much.
Instead, they make use of a peer-to-peer technology known as blockchain to keep track of all transactions. Using this, the bitcoin network is able to keep record of multiple copies of all transactions that ever took place on the platform on multiple user devices at once. Hence, manipulating or hacking cryptocurrencies by hacking into a central database or organization becomes an almost impossible task.
Further, since these virtual currency transactions do not contain or track the identity of their owner at any point, the government’s main aim behind regulating Bitcoins is to keep a close watch on their usage for illegal activities such as money laundering, drug trafficking and terror funding etc.
[Top Image: BTCManager]