BITCOINS AND VIRTUAL CURRENCIES

In India, besides the RBI, the government, too, has made public its discomfort with bitcoin.

On Nov. 30, finance minister Arun Jaitley said India does not recognise virtual currency as legal tender. Earlier this year, a committee set up by his ministry had reportedly recommended banning cryptocurrencies over fears that they could be used to launder money and perpetuate frauds.

These warnings come in the wake of bitcoin’s skyrocketing value—up more than 1,000% this year. In India, its price has almost doubled in a month, from Rs4.55 lakh ($7,070) on Nov. 01 to Rs8.6 lakh on Dec.05.

In spite of the strong warnings, the cryptocurrency exchange operators remain unfazed.

The spike has led to a buying frenzy.

In fact, measures to curb the use of cryptocurrencies have been gaining momentum across Asia.   The central banks of Indonesia and Bangladesh have even barred the use of bitcoin as a payment tool.  In September, China shut down bitcoin exchanges and banned initial coin offerings.  On Nov. 29, the vice-president of the European Central Bank warned against investing in bitcoin at such soaring prices. The governor of the Bank of France cautioned against its potential hazards, as did Russian president Vladimir Putin and Germany’s central bank.

Meanwhile, rallying past all warning signs, bitcoin is at a record high, having crossed the $12,000 mark today (Dec. 06).

It is further said that the Government must take strong steps to stop the transactions in virtual currencies and warnings will not work in India.