Indian central bank warns on Bitcoins; Indian Bitcoin Exchanges Halted As Government Shifts Capital Control Attention Away From Gold

Indian central bank warns on Bitcoins

Reserve Bank of India highlights the risks of digital currencies, including Bitcoins, to users, holders and traders

By Telegraph Staff

12:50PM GMT 27 Dec 2013

India has become the latest nation to warn about the risks of trading in Bitcoins. The Reserve Bank of India said users, holders and traders of “virtual currencies, including Bitcoins” were exposing themselves to “potential financial, legal, customer protection and security related risks”.“There is no underlying or backing of any asset for virtual currencies and as such their value seems to be a matter of speculation,” the central bank said in a statement.

Bitcoins, a digital currency comprising code that can be “mined” using software, can be traded via a number of online platforms or spent on goods where the seller accepts Bitcoin as payment.

They offer a largely anonymous payment system and have begun gaining popularity in India and countries about the world.

Officials in China, France and the EU have raised fears about the potential risks for ordinary people using Bitcoins.

Earlier this month Chinese central bank curbed trading in Bitcoins by banning domestic third-party payment companies from providing clearing services for virtual currency trading platforms.

The Reseve Bank of India, which said it had noted the “huge volatility in the value of virtual currencies”, stopped short of issuing a ban or any curbs on Bitcoins or other virtual currencies.

However, it warned users that the currencies were not authorised by any central bank or monetary authority and a such there was no official safety net is problems arose.

As a result of the warning, BuySellBitCo.in, a major trading platform in India, said it was halting trading in virutal currencies.

“We are suspending buy and sell operations until we can outline a clearer framework with which to work,” BuySellBitCo.in said on its website, adding that the move was “to protect the interest of our customers”.

^{The message on the Bitcoin.india website on Friday}

Bitcoins were invented in the wake of the global financial crisis by a mysterious computer guru using the pseudonym Satoshi Nakamotoby.They have jumped in value this year from $13 in January to a high of $1,200 in early December but fell back sharply after the China crackdown. On Friday they were trading at $793.

Indian Bitcoin Exchanges Halted As Government Shifts Capital Control Attention Away From Gold

Tyler Durden on 12/27/2013 11:11 -0500

Having failed miserably in the “control” of capital outflows from the Rupee (via Gold), the India government (following a Reserve Bank Of India advisory) has raided one Bitcoin seller and issued a warning cautioning citizens against acquiring and trading virtual currencies. As VentureBeat reports, the RBI did not outright ban the currencies, but it slammed them as risky and potentially illegal. On Thursday, the“Enforcement Division” raided the premises of Mahim Gupta who provides trading platform through his website – buysellbit.co.in – finding it in clear violation of Foreign Exchange Management Act (FEMA) rules. Whether smuggling gold or utilizing Bitcoin, it seems the government is fighting a losing battle…cue confiscation?

India practically “bans” Bitcoin (via VentureBeat)…

Several Bitcoin exchanges in India have suspended operations amid fears they could violate anti-money laundering and financial terrorism laws.

They’re reacting to a warning issued on Tuesday by the Reserve Bank of India, the country’s central bank, which cautions citizens against acquiring and trading virtual currencies. The RBI didn’t outright ban the currencies, but it slammed them as risky and potentially illegal:

It is reported that VCs, such as Bitcoins, are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of VCs on such platforms are exposed to legal as well as financial risks.

 

There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.

First Bitcoin exchange raid has occurred (via DNA India),

…

“We have found that through the website 400 persons have recorded 1,000 transactions that amount to a few crores of rupees. We are gathering the data of the transactions, name of the people who have transacted in the virtual currency from Gupta’s server that is hired in the US. At present, we believe that this is a violation of foreign exchange regulations of the country. If we are able to establish money laundering aspect then he can be arrested,” said a top ED official.

As per sources, a separate raid was also conducted in Satellite area of the city, however, the person the investigation agency was looking for could not be found. “When we reached his office, he was not there. We have sealed the premises,” the official added.

…

Sources also added that there are a handful of entities that provide trading in the virtual currency in India. “I think there are only five entities. Of these, we believe two are operating from Ahmedabad. We believe that they have channel of agents or people who promote the use of such currency but entities that provide online platform are few,” official said.

Perhaps it is time to confiscate all the gold, computers, and internet access for anyone not invested in stocks?