BANGALORE: India’s central bank is “watching” Bitcoin, the virtual currency that is gaining popularity among Net users, but has no intention of regulating it right now. TheReserve Bank of India, which has its hands full trying to arrest the slump in the value of the rupee, will first seek to understand Bitcoins – which have attracted regulatory gaze in the United States — before seeking to bring it under its purview.
“As of now we are watching and learning about the developments in Bitcoins but are not regulating it,” an RBI spokeswoman wrote in an e-mailed response. In a note published in June, the central bank acknowledged that virtual currencies “pose challenges in the form of regulatory, legal and operational risks.”
Founded in 2009, Bitcoins are digital currencies that are not issued by any central bank or other centralised authority but by an open source software through a process called ‘mining.’ Over 80% of bitcoins are traded on a Tokyo-based digital currency exchange called Mt. Gox, where one Bitcoin was trading at $107.
Last week a federal judge in the United States ruled that Bitcoins are real money and can be regulated under that country’s law while ruling on a case related to ponzi scheme. While the RBI is taking a wait-and-watch attitude, India-based Bitcoin users and entrepreneurs, whose number has grown steadily over the past two years, are concerned over the absence of guidelines that govern the use of the virtual currency. They are, however, hopeful that Indian regulator would recognise it as a legitimate currency. “Bitcoin is emerging in India and it would benefit the users if RBI could regulate it or take ownership of it,” said Benson Samuel, a Bangalore-based Bitcoin enthusiast who runs coinplace.tk, a knowledge portal on the virtual currency.
Globally, there are over 11 million Bitcoins, worth over $1.2 billion, in circulation. At present, India does not have a centralised Bitcoin exchange, but users in India can buy and sell coins through websites such as localbitcoins. com. The community here is believed to be some 50,000-strong, with as many as 23,000 India-based users having an online Bitcoin wallet where the digital currency is stored. “We are trying to educate the Indian regulators because it is important to take a proactive stand on this,” said Sunny Ray, who has been organising regular Bitcoin meet-ups in Bangalore.
Bitcoins have recently come under increased scrutiny from regulators in the US and other countries over concerns that it could be used for money-laundering. Bitcoins first shot into prominence when the virtual currency became a conduit to circumvent US sanctions on Iran. Earlier this week, the New York Department of Financial Services summoned about two dozen companies associated in connection with their Bitcoin investments.
Rahul De, a professor at IIM Bangalore, attributed RBI’s decision to not regulate bitcoins to the currency’s “uncontrollable nature.” “The RBI does not know where Bitcoins come from and that it is getting into trouble in some countries. I do not expect them to regulate Bitcoins in the near future,” De said.
Source : http://articles.economictimes.indiatimes.com/2013-08-14/news/41409715_1_bitcoin-gox-virtual-currency
