Bitcoins Not Posing Any Systemic Threat But Can’t Be Ignored, SEBI Chief Says
The government is in consultation with the RBI and SEBI on the issue of bitcoins.
Securities and Exchange Board of India Chairman Ajay Tyagi today said virtual currency bitcoin has not posed any systemic threat so far, but it cannot be ignored and a government panel is looking into its issuance.
Currently, bitcoins and any such crypto currencies, are not approved by the Reserve Bank of India or any other regulator.
“The government is in consultation with the RBI and Sebi on the issue of bitcoins. The panel, also consisting of finance and information technology ministries, is looking for what can be done,” Tyagi said at the financial markets summit organised by the industry lobby Confederation of Indian Industry.
Blockchain technology that everyone uses and is useful, should not have regulatory oversight and that’s something which needs to be encouraged.Ajay Tyagi, Chairman, SEBI
It should be noted that regulators and government agencies are in a quandary even as taxing bitcoins will amount to giving it a legal status, and there is no consensus on the issue as it entails huge risks, including money laundering and terrorist financing.
However, there is a kind of unanimity emerging on subjecting such trading to laws against black money, money laundering and frauds so that the interest of general public remains safeguarded.
A gravity-defying bitcoin rally to over Rs 10 lakh a unit, interspersed with ‘stories’ of people making crores from thousands, has left the regulators flummoxed.
The RBI has been issuing warnings since 2013, the first time when the surge in bitcoins caught the attention of Indians, but risks have multiplied manifold now in the wake of a significant spurt in the valuation of many such virtual currencies and a rapid growth in initial coin issuances.
Modelled on the initial public offers for issuance of new shares in the stock market, some entities have begun resorting to initial coin offers to raise funds from investors, including high net-worth individuals and others who are getting lured into claims of huge returns from bitcoins and other such variants, which are apparently getting minted in the digital world but also reaching the real world as wedding gifts.