You read that right! Nothing that our government does shocks me anymore, and there’s not a lot of positive surprises from them in anycase. So a statement that likens Bitcoins to Ponzi Schemes from the Ministry of Finance is nothing scary. But sometimes when I read these things it makes me want to break into a laugh!
Today, the Ministry of Finance has cautioned cryptocurrency users in their statement about the risks of investing in these digital currencies such as Bitcoin and other alt-coins. If you are unfamiliar with Ponzi schemes then you can read all about them here!
Fortunately, they stopped short of any outright bans or imposing any curbs on trading these speculative assets. If you are worried about any bans in the short-term then there’s no need to worry as it’s unlikely that this will ever happen!
VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, Virtual ‘Currencies’ (VCs) are neither currencies nor coins. The Government or Reserve Bank of India has not authorised any VCs as a medium of exchange. Further, the Government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any VC. Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs.
This doesn't imply that exchanges are affected in anyway in their operations. KYC is mandatory but beyond that there are no curbs or restrictions. However, any trades that you conduct or any cryptocurrencies that you hold in any Indian exchange account is tracked and the Income Tax department will have full access to that data whenever they choose to audit any exchange registered in India.
There are no regulations yet and the government still feels VCs are likely to be used for funding terror activities amongst other things. It’s not like they’ve been able to curb any illegal activities with fiat currency. Seems like crypto is a great place to shift blame when problems inherent with fiat money remain unresolved.
Education is key to improving your knowledge of this space and sometimes I feel that the government is still ignorant about a few things. Ofcourse, they want us to be safe in some aspects-there are indeed bad actors and scammers in this space and it's upto us to protect ourselves.
Hopefully in 2018, we’ll see some real progress in India on these lines. About time we got a proper framework. As of now, the stance is pretty clear, cryptocurrencies are not legal tender in India. The government also feels that the market is too small in India to be regulated. Perhaps if a few million users signed up in a matter of months-it might change the minds of the policy makers.
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