17 April 2014

Indian bitcoin exchange shuts after central bank warning

02 January 2014  |  4924 views  |  1 Indian flag

India's largest bitcoin exchange, BuySellBitCo.in, has shut up shop after the country's central bank issued a statement warning about the risks of using virtual currencies.

The Reserve Bank of India says that bitcoin and its imitators have no regulatory approval and that people should be wary of using a currency which is unregulated, volatile and susceptible to security risks.

The RBI says that it is now looking into the usage, holding and trading of virtual currencies as it tries to work out their standing under the country's extant legal and regulatory framework.

India's largest bitcoin exchange, BuySellBitCo.in, promptly suspended trading, posting a brief message on its site explaining "we are suspending buy and sell operations until we can outline a clearer framework with which to work". A rival platform, INBRTC, followed suit.

According to local publication DNA India, the home of BuySellBitCo.in owner Mahim Gupta has since been raided by authorities looking into whether the site has violated the Foreign Exchange Management Act.

Separately, regulators in both Taiwan and Lebanon have issued their own warnings about virtual currencies, raising familiar concerns over the volatility of bitcoin and its potential use for money laundering.

The latest developments come on the heels of a decision by the People's Bank of China to ban financial institutions from providing bitcoin-related services and products, and amid a flurry of similar warning statements by European regulatory bodies.

Comments: (1)

Sridhar Athreya - SunGard Consulting Services - London | 02 January, 2014, 15:24

Virtual currencies such as Bitcoin pose significant investment risks to both amateur and sophisticated investors. A regulatory environment needs to be in place to discourage fly by night operators and agencies dealing in such instruments. The Reserve Bank of India is therefore right in issuing a strong warning to investors.

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