Dec 282013


Bitcoin exchanges in India are shutting down days after the country’s banking regulator warned users of virtual currency against security and financial risks associated with them.

The Reserve Bank of India (RBI) had remained silent on Bitcoin over the past few weeks, even as China started clamping down on the exchanges, sending the virtual currency into a downward spin earlier this month.

A week after India’s small but growing Bitcoin community organized its first conference, and made an appeal to the country’s banking regulators for recognizing the virtual currency, the RBI said the Bitcoin users have not obtained any regulatory approvals yet, which poses several risks to anybody associated with them. This is what the RBI said:

There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws

However, the wording of the announcement from RBI leaves a question mark over the legality of not just the exchanges but also of the people who trade on them.

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