India’s apex bank, the Reserve Bank of India (RBI), has issued an advisory cautioning users, holders and traders of virtual currencies (VCs) such as bitcoin​ about the risks involved.The note published by the central bank stated, “The Reserve Bank of India advises that it has not given any license /authorization to any entity / company to operate such schemes or deal with bitcoin or any virtual currency.As such, any user, holder, investor, trader, etc. dealing with virtual currencies will be doing so at their own risk.” (See also: Bitcoin Predictions for 2017) This is not the first time that RBI has issued such warnings about VCs.Back in December 2013, it had sent out a similar and more elaborate note.The 2013 note mentioned the following risks: This latest warning comes at a time when bitcoin in India has garnered significant interest among investors and users, especially since the demonetization of high denomination notes.The rising popularity of bitcoin in India has probably triggered the unfortunate rise of Ponzi​ and MLM schemes.

(See also: Beware of these Five Bitcoin Scams) Sandeep Goenka, the co-founder of Zebpay, feels that RBI's statement is not targeted at exchanges which follow Anti Money Laundering (AML) guidelines, maintain a full record of client details such as PAN card, bank account and only allow trades via bank transfers.He said, “I don’t believe it has anything to do with virtual currency exchanges like ours as we are all directly in touch with them.Regulating bitcoins and virtual currencies shall help India in a bigger way by helping to create financial infrastructure of the future, making micro remittances cheaper, making record-keeping easier and avoiding counterfeiting of currency.As per some of the top law firms in India, bitcoin is legal as per existing laws.It would greatly help if RBI clarifies its requirements so we can ensure that we comply with all legal requirements.” The conclusion on the 2013 note read, “RBI is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.” However, no formal guidelines for operators and users of bitcoin have been issued ever since.

Bitcoin exchanges on their own part have tried to ensure that AML guidelines are followed and they are tax compliant.(See also: India: Migration, Remittance & Bitcoin) When asked about bitcoins, Raghuram Rajan, the RBI governor at the time, had said, “I have no doubt that down the line, we will be moving towards a primarily cashless society...and we will have some kinds of currencies like this (bitcoin) which will be at work.” He further added, “I think these virtual currencies will certainly get much better, much safer and over time will be the form of transaction, that’s for sure.” Interestingly, RBI has been exploring bitcoin’s underlying technology – the blockchain​.In January 2017, RBI’s Institute for Development and Research in Banking Technology (IDRBT) issued a white paper on applications of the blockchain technology to banking and financial sector in India.India’s private sector banks ICICI and Axis bank have shown great interest in bitcoin’s underlying technology and have even completed successful trials on it.

It’s close to four years since RBI first mentioned virtual currencies in its June 2013 report on Financial Sector Regulation and Infrastructure.A lot has changed since then in terms of user base, trading volumes, mainstream media coverage and awareness about VCs.bitcoin exchange sydneyPerhaps it’s time that RBI formally frames a regulatory structure around VCs such as bitcoin to, give entities involved more clarity and allow a revolutionary technology to grow to its full potential.diebold bitcoinBitcoins is legal under all existing Indian laws.dogecoin blockchainIt’s tough to keep up with technology.bitcoin paypal verkaufenAnd India’s finance sector knows it too well.bitcoin fiscaal

Blockchain technology, based on concepts that underpin cryptocurrencies like bitcoin, is fast gaining pace in Asia’s third-largest economy but business executives still aren’t sure if they understand it.In 2016, some 32 blockchain firms were founded in India, according to audit and consultancy firm PwC.bitcoin multiple psuIn the years before 2016, just 23 were founded, PwC added in its fintech report released on April 21.bitcoin türkeiDespite this, only 17%, or seven, of the 45 Indian financial institutions and executives that PwC surveyed said they were “very or extremely familiar with it (blockchain technology.)” Simply put, a blockchain is a digital ledger which records transactions.sell bitcoin nzdEach cryptocurrency, like bitcoin for instance, has its own blockchain.bitcoin blvd

But it can be used beyond bitcoins.Banks and financial institutions the world over are trying to incorporate blockchain technology in daily operations.During a transfer of funds, “…blockchain allows consumers and suppliers to connect directly, removing the need for a third party,” the World Economic Forum explains.And since the technology can transfer value while cutting out the middle-men, startups and banks are trying to use it for a range of operations like cross-border remittances, for instance.Here’s an explanation of how blockchain technology works by Quartz writer Joon Ian Wong: A blockchain is a digital registry that can’t be tampered with.It provides a mechanism for various parties to agree on a set of facts.It prevents those parties from making false statements, since everyone else can check the facts; it also prevents statements from being changed after they’ve been recorded, since all parties are alerted to these changes.With bitcoin, for instance, the blockchain acts as a ledger of every transaction, thus, providing proof of who owns how many bitcoins.

Bitcoins, though, use a public blockchain technology which anyone can access to transact.Banks, on the other hand, are creating private blockchain technologies which gives network access to a limited number of parties involved in the transactions.In India, while 56% of the companies surveyed by PwC said that blockchain is a part of their innovation strategy, not many have actually implemented it.The most common uses of this technology in the country, according to PwC’s survey, are in fund transfers, digital identity, and payments infrastructure.Banks in India have begun using blockchain for transactions but it is still sporadic.ICICI Bank, YES Bank, Kotak Mahindra Bank, and Axis Bank have used it for vendor financing and international trade finance.Typically the lenders work with external firms and startups which write a smart contract—or software code—to implement the technology as per the use-case.The technology eliminates multiple processes which are time-consuming and costly.“The process is still underway but as the understanding of the technology increases, blockchain will enter the mainstream and be adopted on a greater scale,” the PwC report said.