Bitcoins cannot be ignored, govt in talks with RBI, Sebi for to what to do about it: Ajay Tyagi

Mumbai: Observing that bitcoins cannot be ignored, regulator Sebi chairman Ajay Tyagi on Wednesday said the virtual currency so far has not posed any systemic risk and a government panel is looking into it. Currently, bitcoins and any such crypto currencies, are not an approved product by the Reserve Bank or any other regulator. “On the issue of bitcoins, government is looking into it in consultation with the RBI and Sebi. The panel, also consisting of finance and information technology ministries, is looking into what to do about it,” Tyagi said at the financial markets summit organized by the industry lobby CII. However, he said there should not be any regulatory oversights on blockchain technology saying this is a useful technology which should be encouraged. “Blockchain technology that everyone uses and is useful, should not have regulatory oversight and that’s something which needs to be encouraged and we are also encouraging it,” he said. Blockchain technology is used to deal in bitcoins and other crypto currencies. It can be noted that regulators and government agencies are in a quandary as even taxing bitcoins will amount to giving a legal status and there is no consensus on this given the huge risks, including money laundering and terrorist financing, attached with such activities. However, there is a kind of unanimity emerging about subjecting such trading to laws against black money, money laundering and frauds so that the interest of general public remains safeguarded. A gravity-defying bitcoin rally to over Rs 10 lakh a unit, interspersed with ‘stories’ of people making crores from thousands, has left the regulators flummoxed. The RBI has been issuing warnings since 2013, the first time when the surge in bitcoins caught the attention of Indians, but risks have multiplied manifold now in the wake of a significant spurt in the valuation of many such virtual currencies and a rapid growth in initial coin issuances. Modelled on the initial public offers for issuance of new shares in the stock market, some entities have begun resorting to initial coin offers to raise funds from investors, including HNIs and other individuals, who are getting lured into claims of huge returns from bitcoins and other such variants – apparently getting minted in the digital world but also reaching the real world including as wedding gifts.