The fear of the unknown is more attractive than the known if the rewards are multifold. One such story which attracts everyone’s attention is the growth of the Bitcoin cryptocurrency. The virtual currency has soared over1000 percent since beginning of 2017. The rapid rise in value of the cryptocurrency with extreme volatilitydemands for better controlled or regulated environment. The foreseen risks are reiterated by RBI in theirrecent warning the first of which was released in December 2013. RBI has stressed on few major risks:

    • Risk of hacking, compromise of access credentials, malware attack are the trends associated to cryptocurrency.The virtual currency is stored in Digital Wallets which are created and traded through unauthorized agencies. The loss of e-wallets could wipe out the virtual currencies stored in them
    • No underlying asset as security for virtual currency. Users are exposed to volatility in value as the movement in the currency is speculative and not based on any security in physical or soft form
    • Non regulated trading platformand there is no legal recourse for any Bitcoin fraud. There are no established framework of guidelines for the exchange houses and customers in event of any disputes
    • Possible use of the digital currency forillicit and illegal activities as claimed by the media
    • User can be subject to unintentional breaches of Anti Money Laundering & CFT due to absence of counter party information in the trades.

Final Word:

Market capitalization for all cryptocurrencies is over USD 300 billion with the share of Bitcoin weighing more thanUSD 100 billion. Huge exposures like these can bring down economies if not reigned under control. RBI in consultation with other global regulators need to bring these trades under the existing regulationsor set up new guidelines to protect Indian customers from the exposure to non - regulated entities across jurisdictions.

Talk to us! This email address is being protected from spambots. You need JavaScript enabled to view it.


Explore a Vision of Growth !


901, Kamla Executive Park,
J B Nagar,
Andheri East, Mumbai-400059

+9122 4221 5300
Copyright © 2019 ANB