Setback for Bitcoin in India; raids at websites’ offices

January 3, 2014 Leave a comment

Setback for Bitcoin in India; raids at websites’ offices

By Saloni

According to Enforcement Directorate of India, Buysellbitco.in and RBItco were violating Foreign Exchange Management; both Bitcoin websites have suspended services

World’s most debated virtual currency – Bitcoin, manages to make it to the headlines once again. The Directorate General of Economic Enforcement or Enforcement Directorate of India raided the offices of Buysellbit.co.in and RBItco post under the charges of violation of Foreign Exchange Management Act (FEMA), according to reports by Indian website Medianama. The raids were conducted by Enforcement Directorate in Ahmedabad, the capital city of North Western Indian state Gujarat.The report further states that the enforcement agency pointed out that around 1,000 transactions were made by 400 people through the Buysellbitco.in alone. Post the raid, both RBItco and BuySellBitco.in have suspended their services.

The raid comes close on the heels of an advisory issued by Reserve Bank of India (RBI) on the trade of virtual currencies such as litecoins, bbqcoins, dogecoins and Bitcoin. In the light of growing Bitcoin transactions and constant fear of a potential international black market through Bitcoin, The advisory warned that RBI be will not regulating any such virtual currencies.

The advisory also warned people who were dealing with the currency in India of the risks involved, saying that they’re exposing them to financial, legal, operational and security related risk. Followed by the warning a number of Bitcoin dealers suspended their services.

Buysellbitco.in has posted ‘Post the RBI circular, we are suspending buy and sell operations until we can outline a clearer framework with which to work’, whileINRBTC posted ‘In light of RBI’s notice, services of INRBTC.com are being suspended indefinitely. RBItco flashed a message that says website under maintenance.

RBI states that electronic wallets are prone to loses arising out of hacking, loss of password, compromise of access credentials and malware attack and since the currency is not created or traded by any authorised registry,thus the loss of an e-wallet could result into permanent loss of the virtual currency in contains.

Virtual currencies also do not have any underlying or backing of any asset and thus their value will be constantly subjected to volatility. RBI stated that “it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.”

Post the RBI advisory and raid by Enforcement Development, the Bitcoin segment is shaken as the investors and service providers are under the fear that the Bitcoin bubble has been pricked and they might lose their money.

Bitcoin has received similar reactions from various other countries. Recently France warned its banks about risks related to Bitcoins. Also, China has warned its banks and other financial institution to not deal in Bitcoins leaving the people to transact with the currency at their own risk.

The million dollar question here is that are these temporary measures taken by Indian Government to keep black marketers at bay or Bitcoins in India have completely lost their grounds? While there are diverse speculations on the happening, one can only wait and watch to how the story unfolds further.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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