Bitcoin Prone to Misuse, India’s Central Bank Tells Virtual Currency Committee

Posted in: Archive
September 5, 2017 12:54 PM UTC

India’s central bank has told a parliamentary panel on virtual currencies that bitcoin and digital currencies are “susceptible to misuse”.

The Reserve Bank of India (RBI), the country’s central bank, has warned a governmental parliamentary committee tasked with studying and developing a framework for digital currencies about the potential of their misuse by terrorists and fraudsters.

As reported by the Times of India, the RBI believes bitcoin and digital currencies could be abused by criminals for laundering money. The comments come within months of  India’s Supreme court – the highest court in the land – pushing the RBI to check for bitcoin transactions in relation to terrorism funding and money laundering.

The RBI reportedly told the committee:

It is true that while virtual currencies may have legitimate uses, some of their characteristics like anonymity make them susceptible to misuse or abuse.

India’s central bank has long maintained a hands-off approach to bitcoin and digital currencies, cautioning adopters and users that they will be doing so at their own risk. After issuing a public notice warning users in late 2013, the central bank followed up with a near-identical warning earlier this year as bitcoin adoption gains traction in India. Such has been bitcoin’s explosion in popularity and awareness that India’s finance minister Arun Jaitley – the country’s foremost financial official – admitted that India’s bitcoin market had shown “notable growth” in recent years.

After years of looking the other way, India’s finance ministry established an inter-governmental committee to study and propose a framework for the regulatory and legal future of digital currencies in the country.

Their tasks include:

  • Taking stock of the present status of Virtual Currencies both in India and globally;
  • Examining the existing global regulatory and legal structures governing Virtual Currencies
  • Suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering, etc; and
  • Examine any other matter related to Virtual Currencies which may be relevant.

The committee submitted an early report to finance minister Jaitley last month but few details are known. As such, all signs point toward Indian authorities preparing regulations and taxation laws for the local bitcoin industry and adopters respectively. A ban is highly unlikely.

Featured image from Wikimedia.

Last modified: June 13, 2020 9:34 PM UTC

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Samburaj Das @sambdas

Samburaj is the Editor for CCN, among the earliest and foremost publications covering financial and blockchain news. He has authored over 2,000 articles for CCN. Email him samburaj(@) or find him barely tweeting @sambdas