Bitcoin Exchanges In India Shut Down After Regulator Warning

Next Story

With Angel Funding From Top Media Veterans, The News Lens Wants To Reshape Journalism In Taiwan

Bitcoin exchanges in India are shutting down days after the country’s banking regulator warned users of virtual currency against security and financial risks associated with them. The Reserve Bank of India (RBI) had remained silent on Bitcoin over the past few weeks, even as China started clamping down on the exchanges, sending the virtual currency into a downward spin earlier this month.

A week after India’s small but growing Bitcoin community organized its first conference, and made an appeal to the country’s banking regulators for recognizing the virtual currency, the RBI said the Bitcoin users have not obtained any regulatory approvals yet, which poses several risks to anybody associated with them. This is what the RBI said:

There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws

However, the wording of the announcement from RBI leaves a question mark over the legality of not just the exchanges but also of the people who trade on them.

As we had reported earlier this month, India was just beginning to see a rise in Bitcoin exchanges, and the country’s 1,000-member strong Bitcoin community was hoping to get more merchant endorsements.

BuysellBitco.in, an Indian website offering Bitcoin exchange in the local currency, has already suspended its operations. The founder of BuysellBitco.in, Mahim Gupta, who had previously mentioned that his monthly turnover was around $200,000, could also not be reached for comments. Other Bitcoin traders, perhaps cautious that the RBI’s statements threw their own legal situation into question, were also unavailable.