The Finance ministry of India warned that if anyone is trading for cryptocurrency, they do it at their risks because virtual currencies are not legal tender and such currencies have no protection. This comes right after three warnings issued by the Reserve Bank of India earlier.
The ministry issued a statement, “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. 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 ministry also said that there was 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.
Furthermore, the warning exposed the vulnerabilities in investing in digital currencies. It said the 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. They are also likely being used to carry out illegal and subversive activities, such as, terror-funding, smuggling, drug trafficking and other money-laundering acts. It was also reiterated that the Government of India or RBI has not authorised any Virtual Currencies as a medium of exchange and has not given license to any agency for working as exchange.
This is the first official warning from the government, the Central Bank on three different occasion cautioned the users, holders and traders about the potential financial, operational, legal, customer protection and security related risks that they were exposing themselves to by investing in Virtual Currency including Bitcoin. Moreover, what is happening right now has nothing to do with Bitcoin’s functionality as a currency – this is pure mania that’s taken hold over the web, worldwide.