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Business  2, Jan 2014

Setback for Bitcoin in India; raids at websites’ offices

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According to Enforcement Directorate of India, Buysellbitco.in and RBItco were violating Foreign Exchange Management; both Bitcoin websites have suspended services

Featured Image Courtesy: 123dartist / Shutterstock

World’s most debated virtual currency – Bitcoin, has managed to make it to the headlines once again. According to a reports by Indian website Medianama, The Enforcement Directorate of India raided the offices of Buysellbit.co.in and RBItco, under the charges of violation of Foreign Exchange Management Act (FEMA). The raids were conducted by Enforcement Directorate in Ahmedabad, the capital city of North Western Indian state Gujarat.

The report further states that the enforcement agency pointed out that around 1,000 transactions were made by 400 people through the Buysellbitco.in alone. Post the raid, both RBItco and BuySellBitco.in have suspended their services.

The raid comes close on the heels of an advisory issued by Reserve Bank of India (RBI) on the trade of virtual currencies such as litecoins, bbqcoins, dogecoins and Bitcoin. In the light of growing Bitcoin transactions and constant fear of a potential international black market through Bitcoin, the advisory warned that RBI be will not regulating any such virtual currencies.

Read Also: Oh no, digital crypto currency Bitcoin gets banned in Thailand

The advisory also warned people dealing with the currency in India about the risks involved, saying that they’re exposing them to financial, legal, operational and security related risk.

Following the raids, Buysellbitco.in posted on its website: “Post the RBI circular, we are suspending buy and sell operations until we can outline a clearer framework with which to work”. Meanwhile, INRBTC  too had a similar message on its website: “In light of RBI’s notice, services of INRBTC.com are being suspended indefinitely.

RBItco chose to give a vague message instead: “Website Under Maintenance”.

The Indian monetary regulator feels that electronic wallets are prone to losses arising out of hacking, loss of password, compromise of access credentials and malware attacks and since the currency is not created or traded by any authorised registry, the loss of an e-wallet could result into permanent loss of the virtual currency it contains.

As virtual currencies do not have any backing of any asset, its value is subjected to constant volatility. RBI further stated: “It is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.”

In the past, Bitcoin has received similar reactions in various other countries too. Recently, France warned its banks about the risks in dealing with Bitcoins. China too has warned its banks other financial institutions to not deal in Bitcoins, leaving the people to transact with the currency at their own risk.

Read Also: Bitcoin: Beyond the fear and media hype

Saloni Surti

Saloni Surti

A writer by heart, Saloni loves pouring words about anything and everything under this sky. Short stories and philosophy writing come to her naturally.

  • David

    The biggest threat to the ‘price’ of bitcoin is banks and governments raiding, and preventing the growth of bitcoin via the existing banking system.

  • Ashok Srinath

    Terrible grammar and spelling! I was unable to complete reading it…

  • Saloni Surti

    Thanks for pointing out. Shall make the relevant changes.

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