Bitcoin operators seek legal clarity on digital currency trading in India

Bitcoin operators in India have sought legal clarity on trading of the virtual currency, in the wake of Reserve Bank of India's (RBI) warning against the use of digital currencies (including Bitcoin) in the country, according to a PTI report.

Bitcoin Alliance India, a Bitcoin traders' body, has also urged people to refrain from trading until the government comes up with clarity on the same. The newly-formed body, which has around 10 members, has already hired law firm Nishith Desai Associates to present its case before Indian courts.

We have contacted Mahin Gupta, founder of BuySellBitco.in, a Bitcoin trading platform, for more details and will update the story as and when we get them. According to senior lawyer Nishith Desai, RBI did not clarify in its note whether Bitcoins are illegal or not. In his view, Bitcoin is not illegal per se but there are some situations in which it can be illegal.

Bitcoin operators like BuySellBitco.in and NRBTC had suspended operations after RBI warned that the creation, trading or usage of virtual currencies including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. "No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users," according to RBI.

The central bank also stated that users of virtual currencies are exposed to both legal and financial risks and the absence of information of counterparties in such peer-to-peer anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.

RBI has said it is also examining the issues associated with the usage, holding and trading of such virtual currencies under the existing legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations.

(Edited by Joby Puthuparampil Johnson)