Flagging possible “black money” risks from virtual cyrptocurrencies like bitcoin, the Reserve Bank of India has told a parliamentary panel that they are “susceptible to misuse” by terrorists and fraudsters alike for laundering money.
The central bank further added it has not given any licence and authorisation to any entity or company to operate such schemes or deal with Bitcoin or any virtual currency. As such any user, holder, investor or trader dealing with virtual currencies will be doing at their own risk, the RBI informed the parliamentary standing committee on finance.
An inter-disciplinary committee, which includes an RBI representative, has been constituted by the finance ministry to examine the regulatory framework with regard to virtual currencies, the central bank said.
“It is true that while virtual currencies may have legitimate uses, some of their characteristics like anonymity make them susceptible to misuse or abuse,” the RBI said.
Earlier in the day, the People's Bank of China had declared all initial coin offerings illegal and asked all related fundraising to be halted, issuing the strongest regulatory challenge yet for the booming market of digital currency token sales.
Also Read: Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal
RBI also said that the opaqueness may be taken advantage by criminals, terrorists or fraudsters or for laundering money or even for transactions on the dark web.
Highlighting that there is no underlying or backing of any asset for virtual currencies, the RBI said huge volatility in their values has been noticed in the recent past.
The RBI retreated that it had cautioned users, holders and traders of virtual currencies about the potential financial, operational, legal, customer protection and security related risks they are exposing themselves to.
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