Kirit Somaiya, a Member of Parliament of the ruling BJP in India, has raised concerns about Bitcoin being a Ponzi scheme. The rapid rise of Bitcoin has attracted attention in India, coming as it does during the government’s experiment with demonetization.
Dr. Somaiya has written to the Finance Ministry, the Reserve Bank of India and the SEBI (Securities and Exchange Board of India) on the increasing use of an unregulated currency in India. The finance minister is expected to officially reply shortly.
Strong views against Bitcoin
Speaking in the Parliament, Kirit Somaiya said:
“The use of Bitcoin, a hypothetical currency, is increasing at a rapid speed in India as well as in the world. Experts have expressed concern that Bitcoin is a pyramid Ponzi-type scheme. This issue should be taken very seriously and there is urgent need to have a study on the development of Bitcoin in India. There is no regulator. As it is functioning like currency and seems like Ponzi scheme, RBI and SEBI as well as Finance Ministry to take appropriate step to save the people from another big Ponzi fraud.”
Who is Kirit Somaiya
Kirit Somaiya is a Member of Parliament from Mumbai, the financial capital of India. He is also a chartered accountant, with a doctorate in finance capital markets. He is a member of the ruling BJP and his words are likely to have an impact in shaping policy.
However, as history has shown us, not many experts in the field of finance have been successful in understanding Bitcoin.
For example, Dr. Mark Williams, a finance teacher at Boston University, predicted in 2013 that Bitcoin would trade for less than $10 by June 2014.
Reserve Bank of India’s stance
The RBI has taken a nuanced stance on Bitcoin in India.
While it has not banned the use of Bitcoin outright, it has issued several warnings on the risks associated with using Bitcoin.
Since the usage of Bitcoin is restricted to a small portion of the Indian population, the RBI is watching how the technology evolves.
However, the concerns raised by the MP in Parliament could force the RBI into coming out with concrete views on Bitcoin.