Reserve Bank of India Issues Warning on Bitcoin Amid Growing Popularity of Digital Currencies in India

The Reserve Bank of India has issued a new warning to users of digital currencies, particularly bitcoin traders, saying businesses in India dealing in these instruments don’t have any approval from Indian monetary authorities.

The press release, which was posted last Wednesday by Chief General Manager Jose J. Kattoor, states:
“The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.”
Part of RBI’s statement refers to the bank’s previous warning on digital currencies from December of 2013, in which the RBI points to the inherent risks associated when dealing with bitcoin such as “hacking, loss of password, compromise of access credentials, malware attack etc.”

RBI’s warning comes at a time when awareness and usage of digital currencies in India is on the rise. In their December 2016 newsletter, Indian bitcoin exchange ZebPay said they had amassed 300k+ users.

And bitcoin volumes in India on LocalBitcoins - an online cryptocurrency marketplace that allows users to trade between bitcoin and traditional currencies via multiple online payment methods - have been steadily growing over the past year.

In the third week of November in 2016, more than 27 million rupees worth of bitcoin changed hands on LocalBitcoins in India.

India flag photo by Sanyam Bahga