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India Finance Ministry Compares Bitcoin to “Ponzi Scheme”



The government of India continues to publicly doubt cryptocurrencies.

In a statement issued just recently, the Finance Ministry of India cautioned against the risks associated with bitcoin trading.

It even went as far as to compare blockchain-based assets like bitcoin to “Ponzi schemes.”

The statement is the third warning this year from a government body in India, showing an increasing level of concern among top regulators in the country.

The Reserve Bank of India has given two similar warnings in 2017, one in February and another earlier this December, to people who hold and trade cryptocurrencies.

But the new statement shows how the government is responding to the worldwide spike in the price of various cryptocurrencies.

It reads:

“The price of bitcoin and other [virtual currencies] therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices.

“There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes.

“Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.”

Also in the notice, the Ministry stressed that India doesn’t recognize any cryptocurrency as a legal tender.

It adds that no license is issued in the country to authorize any cryptocurrency exchange.

Therefore, users will carry the potential financial, operational, legal and security related risks when getting involved in cryptocurrencies.

Note Pertaining to Bitcoin Exchange?

The note may be pertaining to existing traders of cryptocurrencies in India.

Data shows that a more prominent cryptocurrency exchange in the country, Koinex, currently sees a $115 million trading volume within 24 hours.

Warning asides, though, what’s also notable is the ongoing discussion in India whether and how cryptocurrencies should be regulated in the country.

India’s Supreme Court has previously encouraged government agencies to respond to an online petition that demands a proper regulation over bitcoin.

Back in August, a cryptocurrency regulation proposal had been forwarded to the Finance Ministry but the timeline remained vague.

As such, the new statement from the government body may still signal a more restrictive rule.

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