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Ministry warns against Bitcoin and similar types of investments
Posted on: 30/Dec/2017 1:50:42 PM
India’s Finance Ministry has warned investors about the risks of trading in cryptocurrencies such as bitcoin.
According to an official statement, digital currency investments are like Ponzi schemes.
Cryptocurrencies are not legal tender and have no regulatory permission or protection in the country. Investors and other participants dealing with such digital currencies are doing so entirely at their risk and should best avoid participating therein. There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes, with investors risking a sudden and prolonged crash. Encrypted transactions in cryptocurrency were likely being used for illegal activities such as terror-funding, smuggling, drug trafficking and other money laundering acts.
A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.
According to legal experts, Mere issuance of an advisory is not sufficient when thousands of people have lost money in cryptocurrency. Government has the sovereign duty to come up with a legal framework to regulate the cryptocurrencies and protect genuine investors.
Bitcoin, the world`s biggest and best-known cryptocurrency, has gained more than 19-fold this year. Digital currencies are very popular across Asia, with many retail investors giving up their daily jobs to trade them full time in countries such as Japan and South Korea, which together make up for more than half the global trading volumes by some estimates.
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