Cryptocurrency Bitcoin| Government cautions investors; warns of ponzi scheme like consequences

Cryptocurrency Bitcoin has been doing its rounds in the news for quite sometime now. For the first-time government of India has come up with its opinion on virtual currencies.

As per the statement released by the ministry of finance, Virtual Currencies (VCs) don’t have any intrinsic value and are not backed by any kind of assets.

The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices.

The statement further said, VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’.

There is, however, no physical attribute to these coins. Therefore, Virtual ‘Currencies’ (VCs) are neither currencies nor coins. The Government or Reserve Bank of India has not authorised 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.

Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs. Earlier on December 17, the Securities and Exchange Board of India (SEBI) had said that it will come down heavily on illicit ‘initial coin offers’ seeking public investments.

“A number of ‘coin offerings’ being made in India are nothing but fraudulent Ponzi or pyramid schemes including some offering secondary trading in Bitcoins or other established virtual currencies, while many others are plain frauds without any such currency actually being in play, they added,” they added.

The RBI has been issuing warnings since 2013, the first time when the surge in bitcoins caught the attention of Indians, but the risks have multiplied manifold now in the wake of a significant spurt in the valuation of many such virtual currencies and a rapid growth in Initial Coin Offerings (ICOs).

(With PTI and Fin Min inputs)