Govt. Labels All Virtual Currencies As ‘Ponzi Schemes’ – 4 Things You Should Know!
The government has issued advisory against all virtual currencies terming them as Ponzi schemes.
Definition: Ponzi schemes are fraudulent investment operations where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.
One of the stingiest and meanest attacks against cryptocurrencies and virtual currencies like Bitcoin has just been unleashed by the Govt. of India. In a press release, which should act as an advisory, Govt. has described as forms of virtual currencies as ‘Ponzi Scheme’.
As defined earlier, a Ponzi Scheme is a fraud, a cheat; and if we go by Govt.’s definition, then all crypto-currencies, including $300 billion worth Bitcoins, is a big scam.
Here, we present 4 things which Govt. has shared in this scathing attack on Virtual Currencies (VC); and which every Indian investor should be aware of:
Investment in VC Is Mere Speculation
Govt. of India has issued a strict advisory against making any investment in bitcoins or any other cryptocurrencies, which have been described as Virtual Currency or VC. In their advisory note, Govt. said:
“The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices.”
Besides, Govt. has also made it clear that such VCs don’t have any ‘intrinsic value’, and are not backed by any asset, which is normally the case with any currency.
Heightened Risk Of Investment Bubble
Govt of India has minced no words in saying that the ‘speculation’ of such VCs can crash any moment, wiping away investor’s hard earned money.
The advisory cautions of ‘real and heightened risk of investment bubble’, as it is often seen in Ponzi schemes, globally. Indirectly, Govt. is saying that don’t invest in such VCs, because its value can become zero any moment.
Illegal Transactions Due To Bitcoins
As in their earlier warnings against bitcoin investments, Govt. has said that currencies such as Bitcoins are not regulated, not monitored, hence can be used for illegal transactions such as buying illegal arms, ransom and hacking and even terrorist activities.
The advisory says:
“As transactions of VCs are encrypted they are also likely being used to carry out illegal/subversive activities, such as terror-funding, smuggling, drug trafficking and other money-laundering Acts.”
Although it has not been said, in case any such illegal activity is caught where bitcoins or any other VCs are being used, then Govt. may take some strict action now.
Virtual Currencies Are Neither Currency Nor Coins
Govt. has once again clearly stated that VCs can be neither described as actual currencies, not coins. Reserve Bank of India or RBI, is the central authority for issuing and printing currencies, and they are not at all involved with any form of VC.
The advisory states:
“VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies.”
Besides, Govt. has made it absolutely clear that VCs are not legal tenders.
The advisory said, “The Government also makes it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India.”
Some analysts have claimed that after such harsh warning and advisory, there is a possibility that bitcoins and other forms of cryptocurrencies can be banned in India.
Although no such announcement has been made as of now, experts of bitcoins are whispering about taking out their investments from Indian exchanges and moving them to overseas locations.
Supreme Court is still hearing a petition seeking regulation of bitcoins in India.
We again repeat, that cryptocurrencies, VCs have NOT been banned as of now. But this is the most straightforward, direct and crude ‘warning’ ever issued.
And things can change any moment now. You can read the full advisory here.
We will keep you updated.