Indian Government Slams Virtual Currencies

businessman on phone with pyramid scheme image in front of him

The Indian Ministry of Finance has taken a cautionary position on cryptocurrencies, comparing the popular digital investments to fraudulent Ponzi Schemes in a press release issued Friday. The document also highlights the risks of investing in virtual currencies, particularly as it relates to their price volatility and vulnerability to hacking.

The Indian government believes virtual currencies have no intrinsic value because they are not backed by any assets. This hardline position may be a prelude to regulatory activity in the country and could result in the decline of Indian rupee denominated Bitcoin transactions.

A Hardline Position Against Virtual Currencies

The Indian Government has made it clear that it does not support virtual currencies, and states that investors who participate in such activities do so at their own risk. The press release goes as far as to explain that virtual currencies, quote ” Do not have any regulatory permission or protection in India” and “The Government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any VC.”

The ministry’s statements may put a damper on the cryptocurrency industry in India, but it is unclear if this is a precursor to the sort of blanket ban that occurred in China earlier this year.

The volume of Bitcoin purchases/sales conducted in Indian rupees has grown exponentially in 2017, but the country still accounts for under 1 percent of the global fiat transaction volume, according to date from Cryptocompare. Virtual currency transaction volume is still primarily conducted in the United States dollar, Japanese yen, the Korean Won, and the euro. Chinese yuan denominated transactions have fallen by up to 90% after the government banned exchanges in September.   

Image Via Shutterstock

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