The Reserve Bank of India (RBI) has cautioned users, holders and traders of virtual currencies (VC) like Bitcoin, Litecoin, BBQcoin and Dogecoin and is examining the legal and regulatory framework of VCs. In a press release, RBI stated that Bitcoin and other VCs are exposed to potential financial, operational, legal, customer protection and security related risks.
RBI said, “The creation, trading or usage of VC including Bitcoin, as a medium for payment, are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities.”
Bitcoin was created to solve the mathematical solution to double-counting but it grew into an alternate currency system altogether; its value has skyrocketed as more and more people, investors and enthusiasts jumped onto the bandwagon and started transacting in the virtual currency. Moneylife had published (Issue 17 April 2013), in detail, a primer on Bitcoin.
With a solution to five-month-old Rs5,600-crore NSEL scam still being elusive, RBI has said it is not advisable to let a single group of shareholders dominate the functioning of any exchange. “The (NSEL) episode has emphasised the need for ensuring that no single shareholder or a group of shareholders is permitted to dominate the functioning of the exchange or exercise management control,” RBI said in its half-yearly Financial Stability Report released recently.
The RBI report also said that there is a need to protect customers against online frauds, SMS alerts, ads inducing depositors to share account details, cloning of credit/debit cards, etc, and asked banks to evolve a comprehensive policy on online banking services.
“In the wake of rumours circulating in the market that from January 1, 2014, banks will not accept banknotes with anything written on them, the RBI has urged members of public not to fall prey to such rumours and to use their banknotes without any fear,” RBI said in a notification.
RBI said it has not issued any such instructions. However, in an earlier clarification, it had instructed only banks to ask their staff not to scribble or write on the body of the banknotes.
RBI has also sought cooperation from all members of public, institutions and others in keeping the banknotes clean by not writing/scribbling anything on them.