Bitcoin exchanges will face more scrutiny

Exchanges of Bitcoin are ready to go under the scanner of research agencies after the government warned people about the risk of investing in cryptocurrencies, which are not backed by the government, and compared them with Ponzi schemes.

application could act against bitcoin platforms and exchanges an official of an enforcement agency said under condition of anonymity.

The capital markets regulator, the Securities and Exchange Board of India (Sebi), will also take action against these exchanges if they are serving as collective investment schemes, a senior official Sebi said on condition of anonymity.

On Friday, the Ministry of Finance warned that there was a real and greater risk of an investment bubble in virtual currencies of th The type seen in Ponzi schemes, which can cause a sudden and prolonged shock.

“Consumers need to be vigilant and be extremely cautious to avoid getting caught up in such Ponzi schemes,” the ministry said.

The president of Sebi, Ajay Tyagi said on December 20 that the bitcoin had so far presented no systemic risk, but added that it can no longer be ignored.

The Ministry of Finance statement followed caution notes from the Reserve Bank of India on the risk of investing in cryptocurrencies after a rapid increase in the value of bitcoin, which closed at around $ 15,000 last week after to start the year at $ 1,012.

The Bitcoin exchanges are unhappy with the regulatory attention focused on the cryptocurrency, which they believe the government has not understood.

“The government’s opinion comes from a lack of understanding, the only way to carry this forward is to educate people more, we have made representations to the government, there is a process for that,” said Vishal Gupta, founder and executive director from “Once again, the problem is which institution will take responsibility for it, Bitcoin enters the preview of which department is not known because it has multiple properties, perhaps multiple regulators will regulate multiple aspects of Bitcoin, if it is illegal, countries like Japan, Singapore and the United States would not regulate it. ”

The Bitcoin exchanges say that it is wrong to characterize the cryptocurrency trade as a Ponzi scheme.

“Bitcoin prices are volatile, but volatility does not make it Ponzi, Ponzi is something where someone guarantees a return, something that is exchanged between you and another person and the price is volatile does not mean it’s a Ponzi scheme In case they are calling Bitcoin a Ponzi scheme, does that mean that Japan and the US are running a Ponzi scheme allowing it there? “Said Praveen Kumar, president and CEO of Belfrics Global SDH, a company that administers exchanges. of bitcoins in Singapore. , Malaysia, Bahrain, Japan, Kenya, Nigeria, Tanzania and India.

Some exchanges of bitcoins have limited transactions and some have stopped certain payment options. “We have decided to stop the operations in India and expect more clarity on this,” said Kumar, “at present, no directives have been reached on exchanges to stop trade.”

So far, banks and payment gateways have stopped working for bitcoin exchanges. For example, Coinsecure has notified its clients that they do not deposit money in their Yes Bank account, which has been permanently disabled.

Lawyers say that bitcoin can not be banned. “The way in which bitcoins are created through blockchain technology is unlikely to cause the accumulation of funds, in fact, the funds create the groups, so to speak, in the same way, the currency is not within the definition. of securities and, therefore, under current regulatory restrictions, Sebi would not be in a position to prohibit its trading, “said Sandeep Parekh, managing partner of Finsec Law.

Friday’s statement from the Ministry of Finance followed a survey by the income tax department in December, after which the department sent notices to up to 500,000 people in the high-ranking network to reveal their holdings and profits. bitcoins

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