Indian Finance Ministry warns: “Cryptocurrencies are Like Ponzi Schemes”
India latest to warn citizens off crypto
There is a lot of scepticism surrounding cryptocurrencies, and the Indian government is doubling down on this trend by not only warning people against investing in Bitcoin and other cryptocurrencies, but also calling Bitcoin a “Ponzi scheme”. Evidently, regulators and government agents in India are showing a level of concern, especially with the new notice being the third warning issued by a government body in India in the last twelve months.
According to CoinDesk, there have been two similar warning issues by the Reserve Bank of India (one in early December and another in February). These warnings have been mostly directed at individuals who are holding and trading cryptocurrencies in India.
Evidently there is concern not just in India but also globally over the skyrocketing prices of a variety of cryptocurrencies. The new statement by India’s finance minister is a clear demonstration of this response.
In a statement, the finance minister said:
The price of Bitcoin and other [virtual currencies] is entirely a matter of mere speculation resulting in a spurt and volatility in their prices. There is a risk of investment bubble of the type seen in Ponzi schemes…Customers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.
The report also highlights the ministry’s position with regards to licensing cryptocurrency exchanges. The notice indicates that India’s finance ministry does not recognize any cryptocurrency as legal tender. As a result, cryptocurrency traders will have to bear with operational, legal, financial and potential security risks if they are to invest in the cryptocurrency space.
However, according to CoinMarketCap data, Koinex (a prominent exchange in India) accounts for over $115 million in trading volume every 24 hours.
Aside from the warning about Bitcoin and cryptocurrency being a Ponzi scheme, there are ongoing discussions in India on how cryptocurrencies can be regulated, with India’s Supreme Court urging various government agencies to look into online demands and petitions that call for proper Bitcoin regulation.
As a matter of fact, a proposal for cryptocurrency regulation was submitted to India’s finance ministry in August 2017. However, the timelines and content of the regulation proposal remain uncertain as the recent government report signals a restrictive rule over Bitcoin and cryptocurrency in general.
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Do you think the Indian government will regulate Bitcoin and cryptocurrency? Also, do you think the warning by India’s finance ministry will put a stop to trading in India? Talk to us and let us know what you think!