Finance Ministry warns against using Bitcoins, says “virtual currencies don’t have intrinsic value”
The Finance Ministry on Friday issued a warning over the use of Bitcoins and asked the users to be wary of virtual currencies as their price is a "matter of speculation". The ministry said that consumers need to be cautious as to avoid getting trapped.
"There has been phenomenal increase in price of Virtual Currencies (VCs) including Bitcoin, in India and globally. Virtual Currencies don't have intrinsic value and aren't backed by any assets. Price of Bitcoin and other VCs is matter of speculation resulting in spurt and volatility in prices," the ministry said.
Bitcoin, a virtual currency, is not regulated in the country and its circulation has been a cause for concern among central bankers the world over for quite a while now. The Reserve Bank of India (RBI) has also cautioned users, holders, and traders of virtual currencies. The government has also said that it does not recognise 'crypto-currency' as legal tender in India. In March, the Union finance ministry constituted an Inter-Disciplinary Committee to take stock of the present status of virtual currencies both in India and globally and suggest measures for dealing with them.
Earlier this month, the Income Tax department conducted a series of raids on Bitcoin exchanges around the country. Raids were conducted at Delhi, Bengaluru, Hyderabad, Kochi and Gurugram.
Recent investigations conducted by the Delhi police pointed to an extortion racket in which Bitcoins were being used. The IB also says that there are instances of political funding taking place through Bitcoins.