Bitcoin Users at Risk in India, Reserve Bank Reluctant to Take Actions
Are Indian regulators so slow to accept the truth of virtual currencies that they are willing to put Indian users of cryptocurrencies at risk?
There has been a steady gain in interest in Bitcoin in India. India Today pegged the rise of the Bitcoin user base in India by 250 percent since the demonetization of 86 percent of currency carried out in November 2016.
Of course, with such a meteoric rise in the popularity of the world’s foremost cryptocurrency also come problems. One of the problems is the rise in fraud and criminal activities. Unscrupulous people are likely to target novice users or people who have limited ideas about how Bitcoin and other cryptocurrencies work.
Unregulated and unrecognized
The inability or rather the unwillingness of the Reserve Bank of India (RBI) to recognize Bitcoin is a major problem for Bitcoin in the country. Not so much in the sense that you can’t buy or sell cryptocurrencies, but more so how to deal with the situation if you are a victim of cyber criminals or fraud and your cryptocurrency gets stolen.
The Daily Mail recently published a story about a businessman in India who was defrauded by lures of high returns.
The paper writes:
“The businessman chose not to file a complaint with police as digital currencies are not recognized by the RBI, even though there are varied views on its transactional legality.”
Ill-informed media causing unnecessary stir
The Indian media is notorious for its sensationalism. It does not help that the Deputy Governor of the Reserve Bank, R. Gandhi has made some rather unfortunate pronouncements regarding cryptocurrencies which have been splashed by Indian papers without providing proper background.
The Deputy Governor was quoted by DNA, a Mumbai-based paper as saying about cryptocurrencies at a fintech summit, “They are prone to losses arising out of hacking, loss of passwords, compromise of access credentials, malware attacks etc.”
The Indian Express carried this story with the headline “Bitcoins: Virtual currencies pose financial risk.” It should be noted that we covered this topic in the recent past and we made it clear that it was the RBI that had put India into financial jeopardy by carrying out an ill-timed and botched up demonetization.
This sort of baseless reporting by the Indian media puts a fear of cryptocurrencies in the minds of people who think that Bitcoin etc are only used by criminals or purveyors of pornography.
Indian authorities need to do their job
Users of Bitcoin need access to information, especially in countries like India where cryptocurrencies are just coming into vogue. They also need support from the authorities if they face problems.
The Indian police have cyber cells to tackle with online crime. It is important that authorities provide support to people who are using digital currencies. If card fraud can be tackled by the police in India, then they should also investigate instances where people have been robbed off their other digital assets.
It would be better if the Reserve Bank would play a more proactive and positive role instead of cringing about how virtual currencies will never replace ‘real’ cash. However, in India, it is often the case that technology outstrips regulations as was the case with Cable TV, which ran in India unregulated for nearly half a decade before the government finally had no choice but to accept the new development.
Will Bitcoin leave the regulators in India behind? Most likely so.