The Reserve Bank of India has made several public shows of support for digital payments and for going cashless — even for blockchain. But the latest from the RBI warns India to be wary of bitcoin.
Reports Friday (Feb. 3) said the RBI issued a new notice to users of bitcoin that warn them that they should be extremely cautious when transacting using the digital currency. It’s a warning worth noting, reports said, considering India seems to be on the forefront of digital currencies. Last month, the RBI released another notice that pinpointed blockchain and digitizing the rupee as ways to make potentially major progress toward goals of a digital economy.
But the RBI’s focus to caution against the use of bitcoin seems to have more to do with security and a lack of regulation in the space.
“The Reserve Bank of India advises that it has not given any license/authorization to any entity/company to operate such schemes or deal with bitcoin or any virtual currency,” the bank stated. “As such, any user, holder, investor, trader, etc. dealing with virtual currencies will be doing so at their own risk.”
A lack of regulation in the area of bitcoin and digital currencies isn’t going unnoticed by the bank. In 2013, the RBI announced that it was exploring the use of digital — including bitcoin — to facilitate trade and transactions, reports said. But even then, the RBI was concerned about security.
“The creation, trading or usage of VCs [virtual currencies], including bitcoins, as a medium for payment are not authorized by any central bank or monetary authority,” the RBI said in 2013. “No regulatory approvals, registration or authorization is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users.”
And more recently, the nation’s decision to demonetize high-value paper notes, a move that has encouraged businesses and consumers to use electronic payments, was also seen by some analysts as another way to make progress toward a cashless economy, one which could eventually include a digital currency.