AMN
Finance Ministry today cautioned people dealing in virtual currencies saying these are not legal tender and have no protection.
Noting that there has been a phenomenal increase in recent times in the price of virtual currencies including Bitcoin in India and globally, the Ministry said the currencies do not have any intrinsic value and are not backed by any kind of assets.
It said the price of Bitcoin and other virtual currencies is entirely a matter of mere speculation resulting in spurt and volatility in their prices.
Finance Ministry further said that there is a real risk of investment like Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money.
In a statement, the Ministry said, users, holders and traders of virtual currencies have already been cautioned three times by the Reserve Bank of India about the potential financial, operational, legal, customer protection and security related risks.
It said RBI has also clarified that it has not given any licence or authorisation to any entity or company to operate such schemes or deal with Bitcoin or any virtual currency.