Bitcoin Users Beware! Govt Warns Against Bitcoin Usage; Threatens To Impose Anti-Money Laundering & Terrorism Laws
There is more bad news for bitcoin startups and users from India.
Govt. of India has warned users of bitcoins and startups dealing with bitcoins that their business is illegal in India. And, has threatened to impose harsh laws against them, which includes anti-money laundering laws and even terrorism laws.
This comes after Reserve Bank of India issued a notification last month, wherein they cautioned all Indians against using bitcoins, and explained the legal, financial risks involved in its usage.
Bitcoins Are Illegal in India: Govt
In a written reply to a question posted in Lok Sabha, Minister of State for Finance, Arjun Ram Meghwal said, “The absence of counterparties in usage of virtual currencies including Bitcoins, for illicit and illegal activities in anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws..”
Note here, that Govt. has cleverly stated that they ‘can’ impose anti-money laundering laws and anti-terrorism laws against bitcoin users. Hence, it is not yet clear whether they ‘will’ impose such harsh laws against bitcoin operators or not.
Most probably, they are warning the Indian citizens against using bitcoins and making it clear that as there is no Govt. control over its distribution and usage, it is illegal in India.
The Minister further said, “No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities..”
This is similar to what RBI said last month when their notification against Bitcoin usage stated that RBI “has not given any licence/authorization to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency .“
Future Of Bitcoins In India?
After RBI and Govt. of India, both have issued warnings against bitcoins, its official status in India remains in question.
After RBI’s notification last month, some of the biggest startups operating in bitcoins had formed an association to safeguard their interests. This was second such association of bitcoin startups ever formed in India. The first one was formed in 2014, named as Bitcoin Alliance of India, which is now defunct.
Four biggest bitcoin startups: Zebpay, Unocoin, Coinsecure and Search trade are right now part of their association, which is named as Blockchain and Virtual currency Association of India; and last heard, they were in the process to register it.
As per entrepreneurs associated with these startups, they were also adding blockchain companies into their association.
The issue is indeed debatable: While on one hand, Govt. can claim that virtual currencies like Bitcoin, which has no regulatory body or law governing its usage, is being increasingly used for cyber extortion and for accepting ransoms; bitcoin and blockchain operators can claim that even countries like China are now adopting blockchain based currencies, which can replace their actual, physical currency by 2050.
Interestingly, leading banks of India such as SBI, Axis Bank and ICICI Bank have started using blockchain technology for preventing bank frauds. And blockchain is the technology which is powering virtual currencies like Bitcoins as well.
We will keep you updated as we receive more information on the status of Bitcoins in India.