Digital currency bitcoin may be nearing a historic trading value of $12000 but the country's apex financial regulator RBI has warned bitcoin and other cryptocurrency deals that they are in the middle of potential risks like financial, legal as well customer protection risks.
The RBI has said that it has not furnished any license or authorization to any entity to carry out schemes or deal with bitcoin or any other virtual currency.
The RBI has also said that an Initial Coin Offering is an unregulated measure via which funds are raised for a new cryptocurrency business.
India doesn't come as the only country to reflect concern on bitcoins as numerous other countries including Russia, Iceland, China, Bangladesh, Sweden, Thailand, Vietnam have restricted the use of the currency. In the US however numerous large corporations are now accepting bitcoin as a mode of payment.
It is also interesting to note that while cryptocurrencies are not legal, there are also now laws against using them as an investment or mode of payment. While China has shunned bitcoin exchanges, there is no legal restriction on the digital currency. Regulatory authorities are also worried that the currency may be used for illegal activities like hackers demanding ransom in bitcoins from victims.
The RBI has framed a group to analyze the possibility of a government-backed digital currency which can come as an alternative to rupee for digital payments. It has also been figured out that about 500 merchants in India accept Bitcoin in the form of payments with their owners being digital currency enthusiasts. The usage of bitcoin in the Indian market is still very low and most of the related holdings deal in investments only.