Sunday, September 20, 2020
Home India Reserve Bank of India (RBI) cautions Users about use of bitcoins and...

Reserve Bank of India (RBI) cautions Users about use of bitcoins and other Virtual Currencies

Mumbai, Feb 2, 2017: The Reserve Bank of India (RBI) has cautioned the users of virtual currencies, including bitcoins, pointing out that it has not issued any licence or authorisation to any company to trade in these and that the users are doing it at their own risk.

“The Reserve Bank of India advises that it has not given any licence or authorisation to any company to operate such schemes or deal with bitcoin or any virtual currency,” the Reserve Bank of India said in a statement on Wednesday.

“As such, any user, holder, investor or trader dealing with virtual currencies will be doing so at their own risk,” the central bank warned.

Please Follow NewsGram on Facebook To Get Latest Updates!

The RBI had earlier cautioned the users, holders and traders of virtual currencies, including bitcoins, about the potential financial, operational, legal, customer protection and security-related risks that they are exposing themselves to.

“The Reserve Bank is presently examining the issues associated with the usage, holding and trading of virtual currencies under the extant legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations,” it said.

There have been several reports of usage of these currencies for illicit and illegal activities in several jurisdictions, which could subject the users to unintentional breaches of anti-money laundering laws and laws combating the financing of terrorism, it added.

“The creation, trading or usage of virtual currencies, including bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users,” the RBI said.

Virtual currencies being in digital form are stored in electronic media that are called e-wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials and malware attack.

Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in permanent loss of the currency held in those.

Payments by these currencies take place on a peer-to-peer basis without an authorised central agency which regulates such payments. As such, there is no established framework for recourse to customer disputes.

There is also no backing of any asset for virtual currencies.

“As such, their value seems to be a matter of speculation. Huge volatility in their value has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value,” the RBI said.

ALSO READ: Rishi Kapoor’s 68th Birth Anniversary: Riddhima’s Special Note to Father

Bitcoins are being traded on exchange platforms set up in various jurisdictions whose legal status is unclear. Hence, its traders are exposed to legal as well as financial risks.

The central bank has said that it has been looking at the developments relating to certain electronic records of virtual currencies such as bitcoins, litecoins, bbqcoins and dogecoins, their usage and trading in the country. (IANS)



Most Popular

Homemade Masks Effective At Blocking Droplets By Speaking, Coughing And Sneezing

Masks made with common household fabrics help prevent the spread of viruses like Covid-19 as researchers have found that they are considerably effective at...

Get Flu Shot to Avoid Having Covid and Flu Simultaneously

Health officials are warning the public to get a flu shot this year to avoid having to deal with COVID-19 and the flu simultaneously. Both...

India Couture Week Was Digital, Virtual And Democratic

It wasn't the familiar setting of the ballroom at the Taj Palace Hotel in the Capital, neither was it the familiar parade of 'shaadi'...

India’s Top Film Industry is Telugu Film Industry: Kangana Ranaut

Actress Kangana Ranaut says she wants film industries of different states to have a collective identity, and claims she wants to save the industry...

Planning a Road trip From Delhi? Here are 5 Must-Visit Destinations

By Siddhi Jain As several countries announced nationwide lockdowns in an effort to flatten the curve and break the chain, the coronavirus jolted the entire...

Top 10 Must Visit Places In Himachal Pradesh, India

Himachal Pradesh, in India, is a picture-perfect state that impresses tourists with scenic hill stations, quaint villages, snow-covered mountains, lush valleys, diverse flora and fauna,...

Here Is the Kind of Internet Connection That You Need for Your Browsing

For household and commercial use, everyone is looking out for the best internet connection. The internet has immensely evolved with time, and a need...

Here’s How Dinosaurs Caused Mammals to Develop Night Vision

By JoEllen McBride When dinosaurs ruled the earth, life was tough for our mammalian ancestors. So they learned to hunker down during the day and...

Recent Comments

Donate to NewsGram to support quality journalism.