The Reserve Bank of India (RBI) has issued a warning on the risks of digital currencies such as bitcoin, marking the second time the central bank has cautioned cryptocurrency users this year alone.
The cautionary note comes at a time when bitcoin is hitting fresh all-time highs almost every day and is showing no signs of slowing down. It is currently trading over $12,300 levels (Bitstamp) at the time of writing. The RBI said:
“In the wake of significant spurt in the valuation of many VCs and rapid growth in Initial Coin Offerings (ICOs), RBI reiterates the concerns conveyed in the earlier press releases [published on December 24, 2013 and February 1, 2017].”
The central bank had earlier cautioned digital currency users regarding the potential economic, financial, operational, legal, customer protection and security related risks and has clarified that it has not given any licence/authorisation to any company to operate digital currency-related schemes.
There also have been recent reports that suggest that a government panel has advised to shut the operations of cryptocurrency dealers in the country.
More recently, the Supreme Court of India sought the government’s response on a plea to regulate the flow of bitcoin and establishing a panel to develop a digital currency regulatory framework. The notice was issued to notice to the ministries of Finance, Law and Justice, Information Technology, Securities and Exchange Board of India (SEBI), and the RBI.
