Indian Minister Apprehensive About Virtual Currencies

On March 28, 2017, Minister of State for Finance Arjun Ram Meghwal stated that the use of virtual currencies is not authorized by the Reserve Bank of India (RBI), repeating the bank’s previous warnings.  In a written reply to the Rajya Sabha, Meghwal stated, “No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities.”  The Minister further elaborated that use of virtual currencies could pose risks of anti-money laundering:

“The absence of counter parties in usage of virtual currencies, including Bitcoins, for illicit and illegal activities in anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws.”

India is currently in the midst of a demonetization process that has the government taking a more aggressive stance on virtual currencies, as a digital rupee was recently suggested as part of a migration proposal toward a cashless, digital economy.

In early March, the Deputy Governor of the RBI, Rama Gandhi, cautioned that virtual currencies “pose potential financial, operational, legal, customer protection and security related risks.” 

Furthermore, the RBI has previously warned that any user, holder, trader, or investor conducting business using virtual currencies should do so at their own risk as it has not authorized any company “to operate such schemes or deal with Bitcoin or any virtual currency.”