In light of recent news where it was alleged that govt.has declared bitcoin illegal,examining the original reply shows Govt, has issued caution to the risk of bitcoin but has not banned Bitcoin,unlike Russia.

1. IS BITCOIN
ILLEGAL IN INDIA?

2. • Some Media outlets recently said Indian Government has declared
Bitcoin and other virtual currencies illegal.
• Apparently, papers said Minister of State in Ministry of Finance,Shri
Arjun Ram Meghwal in his written reply to questions posed to him
declared Bitcoin illegal.

3. • Before we jump to conclusion, lets look at the questions.
• The questions were posed by Dr.K.V.P Ramachandra Rao.

4. • The questions were,-
• Whether Govt. shares the reported comment of RBI that Virtual
currencies pose a financial risk?
• If so, how will it address the problem while pushing for a cashless
economy?

5. • The essence of reply given by Minster of State in the Ministry of
Finance follows
• RBI or Indian Govt. has not given any authorisation or license to
deal with Bitcoins.
• RBI has already cautioned that Bitcoin traders may be exposed to
various risks.
• Creation, trading and other related activities are carried out without
authorisation from RBI and no regulatory approval has been
obtained.
• illicit and illegal activities could subject the users to breaches of
AML/CFT laws.

6. • From the reply it is clear that no where Govt has banned trading or
investing in Bitcoins.
• Govt. has cautioned that without RBI approval trading in Bitcoin is a
risky activity which is undertaken by users at their own peril.
• Illegal activities using bitcoin can be…..well may attract
punishment.

7. • It is unclear how newspapers got the idea that bitcoin has been
declared illegal?
• The reply is not different from guidance already issued by RBI.
• Illegal activities using fiat money is also punishable.Why single out
virtual currencies.
• Until there is an express ban prohibiting dealing in bitcoins, we
can’t say Govt. has declared bitcoin illegal.

8. • As far as my understanding goes Bitcoin users can trade in Bitcoin
at their own risk.
• Do NOT try to launder money using bitcoin.
• Government should come up with definitive guidelines.
• Newspapers should stop scaring people.

9. • The original reply is available at Rajya Sabha website.
• The press briefing related to an earlier reply given by Indian
government is also available at http://pib.nic.in

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