The Indian government on Friday issued a stringent warning to all those investors who are investing unhesitatingly in virtual currencies such as Bitcoin. The seriousness of the latest warning can be gauged from the fact that government has compared cryptocurrencies with notorious ‘Ponzi schemes,’ that are known for duping the hard earned money of investors.
The warning comes closely on the hells of South Korea’s crackdown on bitcoin’s trading, which led to a significant drop of 8% in its value on Thursday. After enjoying the insane ride for almost a year, since past few weeks the world’s most popular cryptocurrency has been stung by a sudden downslide. Currently, Bitcoin’s value is hinging at nearly $15000.
“There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including Bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices,” a statement issued by the finance ministry said.
The finance ministry has also highlighted the fact that cryptocurrencies are stored in digital or electronic formats and are therefore exposed to numerous risks like hacking and malware attacks. It has also brought to notice that transactions of virtual currencies are encrypted and hence are averse to being used for anti-social activities like terror funding, money laundering, drug trafficking etc.
The ministry further goes on to caution that the Central Bank (RBI) has not granted any license or permission to any company or organization to run schemes dealing with Bitcoin or any cryptocurrencies.
There can be little doubt that cryptocurrencies have been one of the central themes of this year. With Bitcoin’s price touching insane levels throughout the year, investors across the world have been in a mad rush to invest fortunes of money in the popular virtual currency. However, this sent several government agencies across the world into virtual tailspin. They have consistently argued that complete lack of regulations over cryptocurrencies makes it prone to financial scandals and misgivings.