India's central bank issues new warning on cryptocurrencies
The Reserve Bank of India (RBI) has once again issued a public caution on cryptocurrencies. So, this is the second time when something like this takes place, as the RBI has issued a similar warning in February. Of course, the main cryptocurrency that the RBI targeted is the bitcoin.
The RBI issued a public notice on December 5. In the notice, the bank said that adopters of cryptocurrencies should be careful at the "potential economic, financial, operational, legal, customer protection and security related risks" when using these types of currencies. The message referred to all cryptocurrency users, including holders and traders.
The central bank of India also said that it will maintain its previous decision of not licensing or authorizing entities that want to deal with virtual currencies, regardless of their potential operation or type. To be mentioned in this context that the RBI also warned about initial coin offerings (ICOs). ICOs are new forms of fundraising, which allow companies to raise capital in cryptocurrencies, in exchange for digital tokens.
The RBI said in its public notice:
India first warned about cryptocurrencies in 2013
India has actually been one of the first countries to warn about the risks associated to cryptocurrencies. India issued its first warning in December, 2013, when it said that the country's central bank and all other monetary authorities will not authorize bitcoin as a form of payment.
Although Indian authorities have not recognized bitcoin as an accepted form of payment, it is important to mention that they have not deemed it illegal, either. Considering this reality, the Indian Supreme Court has actually asked the country's central government to issue some clear guidelines to regulate the cryptocurrency.
A committee set by the Indian finance minister recommended earlier this year the ban of all cryptocurrencies, raising concerns on the potential of being used for fraud and money laundering. However, no decision has been taken on the matter for the moment.