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Reserve Bank of India Issues Advisory After Bitcoin Value Surge

The RBI said that it has not been given any license or authorization to bitcoin, and those dealing in the currency are doing so at their own risk.

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The Reserve Bank of India (RBI) has cautioned users, holders, and traders of virtual currencies (VCs), including Bitcoins, regarding the various risks associated with such dealings. The RBI through an advisory issued earlier this week informed people of the potential economic, financial, operational, legal, customer protection, and security related risks associated in dealing with such VCs.

In light of the recent boom in the value of Bitcoin, which was valued at as high as $16,675.01 on Dec. 8, critics have said that the hike in value is a bubble that could burst any moment. The 52-week range in value of Bitcoin has been $752.8023 to $19,230.7695.

RBI has also clarified that it has not given any license/ authorization to any entity/company to operate such schemes or deal with Bitcoin or any VC. In the wake of significant spurt in the valuation of many VCs and rapid growth in Initial Coin Offerings (ICOs), RBI reiterates the concerns conveyed in the earlier press releases in 2013 and February 2017, it said.

The RBI said that those who deal in it are doing so “at their own risk” in February. The advisory in 2013 said that the central bank is “looking at the developments relating to certain electronic records claimed to be “Decentralised Digital Currency” or “Virtual Currency” (VCs), such as, Bitcoins, litecoins, bbqcoins, dogecoins etc., their usage or trading in the country and the various media reports in this regard.”

The bank said that it was not authorized by any central bank or monetary authority.

According to Bitcoin’s website, the price of a bitcoin can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets. It says that the virtual currency is not an official currency and organizations need to follow tax and other legal or regulatory mandates issued by their government and/or local municipalities.

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