The Indian government is currently deciding whether to regulate Bitcoin. Meanwhile, some Parliament members are working towards cracking down on illegal activities involving the digital currency. Bitcoin.com spoke with Sandeep Goenka, co-founder of the leading Indian bitcoin broker Zebpay, to find out more about the situation in his country.
Also read: India’s Government Divided Over Bitcoin Legalization
Government’s Effort to Stop Illegal Bitcoin Activities
The Indian Ministry of Corporate Affairs is responsible for implementing companies law. It has recently instructed the Serious Fraud Investigation Office (SFIO), regional directors, and the Registrar of Companies “to gather details about firms involved in bitcoin dealings,” reports the Economic Times, India’s leading business newspaper.
The communication was sent by the ministry to Lok Sabha MP and BJP leader Kirit Somaiya who has raised concerns about “illegal exchange and trading of bitcoins in the country,” according to the publication. The government is concerned over risks associated with digital currencies and “the possibility of them being used to dupe investors.”
The authorities have been instructed to focus on investors, depositors, the public and stakeholders who may be adversely affected and companies that may be using bitcoin “to lure the gullible public in collecting funds,” the publication details.
Legitimate Bitcoin Businesses vs Pyramid Schemes
The government’s efforts could be primarily aimed at pyramid schemes, rather than legitimate bitcoin exchanges and businesses. “There are 1-2 pyramid schemes which market themselves as Bitcoin mining in India,” Goenka told Bitcoin.com.
“I think Mr. Somaiya’s intentions are well meaning in the sense that he might have got news regarding pyramid schemes disguised as Bitcoin mining,” Goenka described. “Unfortunately the good intention has been confused with the technology,” he noted, adding that:
I believe this will be resolved when the committee report comes out and distinguishes between virtual currencies and its potential vs pyramid schemes misusing the name of this technology.
Government’s Committee and Bitcoin Regulations
Bitcoin.com reported on the Indian government forming a committee in April. The committee “is currently studying this industry and might give recommendations to the government in June / July,” Goenka said, adding that:
Right now the committee is expected to give a recommendation. Based on the recommendation, the government will decide the next action step. I think the whole process will take at least a year before there is any clarity on regulation.
Meanwhile, bitcoin trading in India has been growing significantly. Last month, Zebpay announced that it had reached a milestone of over 500,000 app downloads, with more than 2,500 users added daily. On the peer-to-peer bitcoin exchange Localbitcoins, trading volumes in India’s rupee hit record highs last week.
How well do you think the Indian Government will understand Bitcoin if/when they finally regulate it? Let us know in the comments section below.
Images courtesy of Shutterstock, Coin.dance, Zebpay
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