The situation with Bitcoin on the Indian subcontinent is in murky water. Today, Indian Finance Minister Arun Jaitley called out against the digital coin, clarifying that it is not legal tender in the country.
He also confirmed that the government is waiting for a report from a panel of experts on the subject of cryptocurrency before taking any final decision.
This is not the first time that the country’s minister has made such a hard statement on the emerging crypto economy. Last week, in an official statement, the Finance Ministry warned Indian citizens against Bitcoin investments and asked them to consider the risks of trading cryptocurrencies. The statement went even further, comparing blockchain-based assets like Bitcoin to Ponzi schemes.
The official statement reads: “There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.”
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India’s finance minister recently appointed a dedicated panel to examine the existing framework of cryptocurrencies and come up with measures for dealing with them. The government-appointed panel was given three months to submit its reports on issues relating to consumer protection and money laundering.
Earlier in November, another government committee recommended that Indian authorities take immediate steps to shut down the country’s cryptocurrency exchanges, saying that the use of Bitcoin and the like could result in breaches of anti-money laundering provisions.
The Supreme Court of India has also intervened – a three judge bench, hearing a Public Interest Litigation (PIL), issued a notice to the ministries of finance, law and justice, information technology, market regulator SEBI and the Reserve Bank of India, seeking their response on the subject.
Aside from the finance ministry, the Reserve Bank of India is also studying the feasibility of cryptocurrencies as legal tender, but officials have made it clear that they are not comfortable with Bitcoin or any other digital currency.
Last month, Indian tax authorities also issued notices to half a million high net-worth individuals who invested in cryptocurrency.
Illicit activities using digital currency are also emerging – Uttar Pradesh police recently nabbed a gang of Bitcoin scammers.