India’s government is keeping a watchful eye on companies dealing with bitcoin to look for any potential abuse of them ‘luring’ investors.
As bitcoin soars to unprecedented heights in valuation, the Indian government, through its corporate regulator, is reportedly looking into companies getting into bitcoin transactions. In effect, the Ministry of Corporate Affairs (MCA) is not only looking into activity at bitcoin exchanges but all registered Indian companies dealing with bitcoin.
The move was first revealed by the Press Trust of India, a non-profit cooperative that sees over 500 Indian newspapers as its members to be the largest news agency in the country. The news has since made it to mainstream publications like the Economic Times, India’s largest financial news daily.
According to the report, the Ministry has instructed the Serious Fraud Investigation Office (SFIO), an investigating arm of the ministry, as well as the Registrar of Companies in India to ‘gather details’ about companies involved in bitcoin transactions.
The specific instructions issued by the Ministry demand to check if:
[I]nvestors/depositors/public or stakeholders are being prejudicially affected and/or such companies are using this mode of investment to lure the gullible public in collecting funds.
As things stand, bitcoin is neither legal nor illegal in India and the young but growing bitcoin industry is unregulated by the government. In February, the Reserve Bank of India, the country’s central bank, pointedly issued a public notice stating that investors or adopters of digital currencies would be doing so at their own risk.
Three months later, it is a markedly different picture for bitcoin legislation in the country. In March, India’s Finance Ministry (FinMin) established an inter-disciplinary committee to study and research digital currencies and their regulatory frameworks in other countries. The committee is tasked to recommend a course for the regulation and legislation of digital currencies in India. It has since been widely reported that bitcoin is set to gain legality in India. Earlier this month, an Indian publication cited a FinMin source as stating that the government is working on regulations for the bitcoin industry.
Still, news of the corporate ministry looking into bitcoin activity at companies is hardly going to temper the rhetoric adopted by Indian politicians who have called for a ban of bitcoin, deeming it a “pyramid ponzi scheme” in discussions at the Indian Parliament in the past.
As such, a 10-day public session of the FinMin inviting suggestions from Indian citizens about banning or regulating digital currencies comes to an end today.
A fleeting glance into the Indian public’s suggestions reveals overwhelming support for bitcoin legalization in the country.
If India does recognize and legalize bitcoin in the coming months, it would mirror Russia in its complete reversal of stance where authorities went from proposing prison sentences for bitcoin adopters to publicly talk about the possibility of recognizing and regulating bitcoin, in the space of a year.
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