Bitcoin as a virtual currency has seen its ups and downs, and quite recently, a surge in the graph of the currency, tells us an interesting story. Amidst the growth of crypto-currency market worldwide, much has been said about plenty of risk that bitcoin brings with itself.
Report of Inter-disciplinary Committee
The Government constituted an Inter-disciplinary Committee on 12th April, 2017 to examine the existing framework regarding virtual currencies and evaluate the risks associated with them. Inter alia, the Committee was expected to perform the following functions:
- take stock of the present status of Virtual Currencies both in India and globally;
- examine the existing global regulatory and legal structures governing Virtual Currencies;
- suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering , etc; and
- examine any other matter related to Virtual Currencies which may be relevant.
The Committee was expected to submit its report by within a span of 3 months. Though a report was successfully submitted, the issue of what will be the fate of bitcoin was left undecided. It appears that the RBI is still unclear and uncomfortable with the idea of legalizing and regulating virtual currencies.
The clampdown of the crypto-currency in China
China has recently banned all bitcoin exchanges in the country. The Government of China had few days ago banned initial coin offerings (ICO). ICO is a means of funding new ventures and start-ups, backed by blockchain technology, a technology which forms the basis for crypto-currencies like bitcoin. The developments could very well set a precedent for other jurisdictions, including India, which are still mulling over its regulation and supervision.
Continuous Silence of RBI
Regulatory authorities like RBI and SEBI are neither comfortable in legalizing bitcoin nor regulating it. While eight years have passed since the crypto-currency was introduced in the nation, Government has still not been able to take an official stand on the vexed issue. Is it is justified to keep the stakeholders and the public at large, in suspense? Indeed the regulatory silence may be costly and if no steps are taken on time, the cost would be unbearable and the loss would be unrecoverable.