Trading in virtual currencies, including bitcoins, is not authorised and its usage in illegal activities may attract provisions of the anti-money laundering law, Parliament was informed on Tuesday.
A number of major Indian news media sources have reported that bitcoin has been deemed illegal by the Indian government. They’re wrong.
In today’s session of the Rajya Sabha, the upper house of the Parliament of India, an Indian politician weighed in on bitcoin, a cryptocurrency that is increasingly awareness and adoption among Indians. Arjun Ram Meghwal, the Union Minister of State in Finance said in a written reply during a Rajya Sabha session today:
The absence of counter parties in usage of virtual currencies including Bitcoins, for illicit and illegal activities in anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws.
“The creation, trading or usage of VCs, including bitcoins, as a medium of payment is not authorised by any central bank or monetary authority. No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” Meghwal added.
The Reserve Bank of India had earlier stated that it had not given any licence/ authorisation to any entity/ company to operate such schemes or deal with bitcoin or any other virtual currency. The apex bank had issued cautionary advice to the users, holders and traders of virtual currencies about the potential financial, operational, legal, customer protection and security-related risks that they are exposing themselves to.
The RBI had earlier warned that any user, holder, investor and trader dealing with virtual currencies would be doing so at his/her own risk.
Reacting to this development Saurabh Agrawal, CEO of Zebpay told Moneycontrol: “We appreciate the honourable minister’s concern. However, we are sure Indian government is progressive and to ensure right growth will come out with positive regulations on digital currencies and will support the growth of the technology.”
Earlier on his blog, Agrawal had said that the government should explore the technology and should not declare it as illegal.
“Just for the same reasons that the Internet, the smartphone or a taxi hailing app should not be declared illegal when used for illegal activity. Because it makes far more economic sense to go after bad actors (ponzi schemes) rather than shutting down the entire technology,” he had said.