Contact Your Financial Adviser Money Making MC
2
February 2017
The
Reserve Bank of India (RBI) has cautioned the users of virtual currencies,
including bitcoins, pointing out that it has not issued any licence or
authorisation to any company to trade in these and that the users are doing it
at their own risk. The Total Investment & Insurance
Solutions
"The
Reserve Bank of India advises that it has not given any licence or
authorisation to any company to operate such schemes or deal with bitcoin or
any virtual currency," the Reserve Bank of India said in a statement on
Wednesday. The Total Investment & Insurance
Solutions
"As
such, any user, holder, investor or trader dealing with virtual currencies will
be doing so at their own risk," the central bank warned. The Total Investment & Insurance Solutions
The
RBI had earlier cautioned the users, holders and traders of virtual currencies,
including bitcoins, about the potential financial, operational, legal, customer
protection and security-related risks that they are exposing themselves to. The Total Investment & Insurance Solutions
"The
Reserve Bank is presently examining the issues associated with the usage,
holding and trading of virtual currencies under the extant legal and regulatory
framework of the country, including foreign exchange and payment systems laws
and regulations," it said.
There
have been several reports of usage of these currencies for illicit and illegal
activities in several jurisdictions, which could subject the users to
unintentional breaches of anti-money laundering laws and laws combating the
financing of terrorism, it added.
"The
creation, trading or usage of virtual currencies, including bitcoins, as a
medium for payment are not authorised by any central bank or monetary
authority. No regulatory approvals, registration or authorisation is stated to
have been obtained by the entities concerned for carrying on such activities.
As such, they may pose several risks to their users," the RBI said.
Virtual
currencies being in digital form are stored in electronic media that are called
e-wallets. Therefore, they are prone to losses arising out of hacking, loss of
password, compromise of access credentials and malware attack. The Total Investment & Insurance Solutions
Since
they are not created by or traded through any authorised central registry or
agency, the loss of the e-wallet could result in permanent loss of the currency
held in those.
Payments
by these currencies take place on a peer-to-peer basis without an authorised
central agency which regulates such payments. As such, there is no established
framework for recourse to customer disputes. The Total Investment & Insurance Solutions
There
is also no backing of any asset for virtual currencies.
"As
such, their value seems to be a matter of speculation. Huge volatility in their
value has been noticed in the recent past. Thus, the users are exposed to
potential losses on account of such volatility in value," the RBI said. The Total Investment & Insurance Solutions
Bitcoins
are being traded on exchange platforms set up in various jurisdictions whose
legal status is unclear. Hence, its traders are exposed to legal as well as
financial risks.
The
central bank has said that it has been looking at the developments relating to
certain electronic records of virtual currencies such as bitcoins, litecoins,
bbqcoins and dogecoins, their usage and trading in the country.The Total Investment & Insurance Solutions
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