A Blow to Bitcoin in India as Exchanges Suspend Operations (Jan. 3, 2014)
Several of India’s largest Bitcoin exchanges have shuttered after the country’s central bank issued a statement last week warning of the risks of virtual currencies. On Dec. 24, the Reserve Bank of India released a public advisory cautioning the users, holders and traders of virtual currencies, such as Bitcoin, of the “potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.” The statement noted that such currencies have not been approved by any central bank or monetary authority, and thus present risks to users, including loss through hacking, lack of an established framework for recourse related to customer problems or charge disputes, and highly volatile fluctuations in value. The bank’s notice also claimed the legal status of virtual currency exchanges was “unclear” and when trading on those platforms, users “are exposed to legal as well as financial risks.”
Just days after the announcement, India’s largest Bitcoin exchange, BuySellBitCo.in, halted its operations. In a notice posted on its Website, the exchange said that in light of the bank’s notice, “we are suspending buy and sell operations until we can outline a clearer framework with which to work.” Another Indian Bitcoin exchange platform, INBRTC, also halted operations, posting a similar notice. Reports from India media outlets also claim the home of BuySellBitCo.in owner Mahim Gupta has been raided by officials.
The shuttering of the Indian exchanges comes on the heels of an announcement by Chinese officials in early December that banned financial institutions in the country from using Bitcoin as currency. Weeks later, one of the country’s largest Bitcoin exchanges, BTC China, was forced to stop accepting deposits in the Chinese currency renminbi. Bitcoin has come under scrutiny from regulators in nations around the world, including the U.S., where the Senate recently held hearings to address the risks and positive potential of digital currency.