Wednesday, December 4, 2013

Illegal Use Of Bitcoins Increasing And RBI And Indian Government Are Sleeping

The virtual currency known as Bitcoins is increasingly being used in India that also in an unregulated and illegal manner. Although laws and regulations are there that prohibits the use of Bitcoins in India in their present form yet individuals, companies and institutions are openly using the same with great disregard to Indian laws.

Thailand has recently banned use and dealing of Bitcoins in its jurisdictions. According to legal experts, Bitcoins may be specifically regulated in India as well very soon. While the trading of Bitcoins has been suspended in Thailand due to Bank of Thailand advisement (PDF) yet the reserve Bank of India (RBI) is not fulfilling its statutory duties in this regard. As a result Bitcoins are used in India for multiple purposes including conducting medical and surgical abortions in India.      

Many Bitcoins enthusiastics wonder whether use and dealing in Bitcoins legal or illegal in India?  There is no straight forward answer to this question but the legality of Bitcoin in India is in doubts.

According to Praveen Dalal, managing partner of ICT law firm Perry4Law and leading techno legal expert of Asia, the Information Technology Act, 2000 clearly puts Internet Intermediary under Legal Obligations to observe Cyber Law Due Diligence in India and to meet Internet Intermediary Compliance Requirements.

Some Regulatory Guidance regarding Bitcoins can be obtained from the Indian Virtual Currency Schemes issued by RBI but Regulatory Authorities like RBI, Medical Council of India, etc must clearly specify the use and manner of use of digital currencies like Bitcoins for various purposes. Bitcoins, their functionality and legality of use in India is still a “Grey Area” till then, informs Dalal.

Those companies and websites that are accepting Bitcoins in exchange of goods and services are doing it in an illegal manner and they can be prosecuted and punished. It is always better to observe cyber law due diligence before engaging with Bitcoins in India in any manner whatsoever.