RBI Warns Against Usage of Bitcoins; Cautions Users Against Legal, Financial Risks
Reserve Bank of India has issued a notification stating that they haven’t authorized usage of bitcoins in India. It doesn’t stop here, as RBI has clearly warned Indians against using bitcoins.
In their notification, RBI has said that usage of bitcoins can pose potential operational, financial, security related risks; and anyone using bitcoins will do so at their own risk.
Their notification said, “The RBI advises that it has not given any license/authorization 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,”
This is certainly one of the most strongly worded cautions ever released by RBI against the usage of bitcoins in India. The future of bitcoins and related alternate currencies in India is now at a grave risk.
Why Did RBI Issue A Caution Against Bitcoins?
In the last few years, bitcoins have gained an unfortunate reputation of being a medium to carry out illegal activities online, and most probably, this is the ‘image’ which caused RBI to come out with such a warning.
Although Oxford had included bitcoin as a new word in their dictionary, way back in 2013, hackers and anti-social elements are now using the anonymous mode of bitcoin and exploiting it for carrying their wrong deeds.
Last year we reported how bitcoin is being increasingly used by hackers to demand ransom from hapless victims; and the primary reason is that this virtual currency is not monitored or controlled by any regulatory body in India.
Due to same very reasons, way back in 2013, RBI had to issue a similar warning against bitcoins, when they said, “The creation, trading or usage of virtual currencies including Bitcoins are not authorized by any central bank or monetary authority. As such, there is no established framework for recourse to customer problems,”
But.. Can Bitcoins Be Safe As Well?
This is the million dollar question, which every active bitcoin trader is asking right now.
Take for instance example of China, wherein their Govt. is creating a new currency model based on the principles of bitcoin. And if we believe some internal reports, then this new virtual currency mode will replace all types of currencies in China, which includes digital wallets and paper-based currency.
In fact, even, RBI has appreciated the fundamentals of blockchain, in countering fake currency and to stop the menace. And blockchains are the technology behind bitcoins!
RBI shouldn’t simply discourage a new platform, only because it is not able to understand it. Regulations can be introduced to monitor its usage, and hackers can be arrested for demanding bitcoins as ransom. Maybe we should seek more clarity from China, which is actually developing a bitcoin type platform for replacing their currencies.
Bitcoin is a strong concept, and has the power to change existing financial systems. We must learn it, and embrace it. Not avoid it and ban it, because it represents actual free market dynamics.