Last week, the Reserve Bank of India (RBI) released a statement that regulated entities such as banks are not to do business with any entities that deal in virtual currencies like Bitcoins. It stated that virtual currencies raise concerns of consumer protection, market integrity, and money laundering, and so entities regulated by the RBI shall not deal with individuals or businesses dealing with virtual currencies.

This is in line with the statements made in September last year which was before the Bitcoin surge in which the RBI expressed its uneasiness with Bitcoin. At the start of the Financial Year, the Finance Minister Arun Jaitley has also said that the Bitcoin is not a legal tender in India and even linked cryptocurrencies to Ponzi Schemes. As a part of budget speech Mr. Finance Minister reiterated that cryptocurrencies are not legal tender and their use will be eliminated.

However, there are number of sites in India that are still dealing in Bitcoins. Due to the move taken by the RBI they all are under pressure and have seen sharp dip in daily trade volumes in India. Now the people who have put money in cryptocurrencies its the next worst thing for them. The RBI notice is like a full ban on these cryptocurrency exchanges. “This move from the regulators raises many concerns for traders who were looking at long term investments and also there is risk of ‘small trade’ as users will try and sell out their assets for cash, or under the table dealings which will be difficult to track and it might also encourage illicit trade practice and black market,”

The technicians still believe that the block chain technology i.e. the technology underlying the bitcoin is really great. And the RBI in the future may use such technology to launch its own cryptocurrency.

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CA Bharat Poplani


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