Reserve Bank of India (RBI) has the statutory obligation to maintain financial stability and currency legitimacy in India. However, RBI is failing in this statutory obligation by leaving the Bitcoins unregulated and allowing them to be used as an alternative to Indian currency. The illegal use of Bitcoins is increasing and RBI is not doing anything in this regard.
It seems the Indian approach toward Bitcoins is of indifference rather than of concern. Thailand has recently banned use and dealing of Bitcoins in its jurisdictions. Now even the People’s Bank of China (PBC) has warned financial institutions that they should be “on guard” against the use of Bitcoins because of risks of fraud and money laundering. RBI, on the other hand, is not fulfilling its statutory duties in this regard. As a result Bitcoins are used in India for multiple purposes including conducting medical and surgical abortions in India.
As per RT, PBC has issued a joint statement along with five other ministries that has clarified that Bitcoin has “no legal status or monetary equivalent”. PBC has also urged financial and payment institutions not to use Bitcoin pricing for products or services, may not trade or sell Bitcoins, sell Bitcoin-related insurance, provide customers with Bitcoin registration, trading or other services, conduct Bitcoin storage, issue mortgages in Bitcoin, or set up investment funds or trusts based on the currency.
Individuals however, are free to buy and use Bitcoin at their own risk, and PBC cannot be held accountable for any losses, as the digital currency is not tied to any government or central banking institution.
We at Perry4Law and Perry4Law’s Techno Legal Base (PTLB) believe that China has adopted the right approach that India is not willing to undertake. Indian government and RBI must understand that the sooner position of Bitcoin is clarified the better it would be. Waiting for other nations and authorities to take a stand and then regulating Bitcoin shows weakness of and lack of insight on the part of Indian government and RBI.
With its growing popularity, Bitcoins frauds and crimes are also increasing world over. Cyber criminals and crackers have started exploiting software and the platforms using Bitcoins. In one such incidence Sheep Marketplace, the descendant of Silk Road, has been compromised and 5,400 Bitcoins (worth about $5.6 million) have been stolen. India would also not be free from troubles and the inaction on the part of Indian government and RBI would only make things worst.