Lok Sabha Question No. 269 (STARRED), answered on 2018-01-05
Subject: Fraudulent Practices by Bitcoin Companies
Ministry: CORPORATE AFFAIRS
Asked by: M. I. SHANAVAS

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 269 ANSWERED ON FRIDAY, THE 05 th  JANUARY, 2018 [PAUSHA 15, 1939 (SAKA)]

## FRAUDULENT PRACTICES BY BITCOIN COMPANIES

## QUESTION

*269. SHRI M. I. SHANAVAS:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether the Government has taken cognizance of the growing reports of cheating and fraudulent practices by bitcoin companies;
- (b) if so, the details thereof;
- (c) whether  such  companies  are  repeatedly  violating  rules  laid down by the Government by not filing annual balance sheets; and
- (d) if  so,  the  details  thereof  along  with  the  action  taken  against such companies so far?

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS              (SHRI ARUN JAITLEY)

- (a) to (d): A statement is laid on the Table of the House.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  THE STARRED QUESTION NO. 269 FOR ANSWER IN LOK SABHA ON 05.01.2018

(a) to (d): Bitcoin is a type of unregulated digital money that is issued and normally controlled by its developers and used and accepted among the  members  of  virtual  community.    The  Bitcoin  does  not  have  legal recognition in India.  However, it has presence both in the public domain and in the unorganized market.  Players in the public domain operate through websites offering multiple investment options to the community of Bitcoin clients. There are a number of trading platforms for Bitcoins in  India,  but  since  it  is  not  regulated,  there  is  no  credible  source  of information  with  respect  to  the  investment  products  and  volumes  of transactions.

The Government has constituted an Inter-Departmental Committee to take stock of the present status of virtual currencies in the country and globally; examine its regulatory and legal framework in the  global  context;  and  make  recommendations  with  respect  to  a possible  domestic  regulatory  framework,  if  considered  appropriate along  with  mechanism  with  respect  to  inter-alia,  preventing  money laundering, consumer protection and tax collection.  The Committee has recommended that general public should be cautioned against dealing with Virtual Currencies in any manner and that consumer protection and enforcement agencies should act against those indulging in trading in these  currencies  in  any  manner  on  the  premise  that  it  is  illegal, fraudulent and done with and intent to evade tax.

The Government has declared that Virtual Currencies, including Bitcoins, do not have any underlying assets and their price is entirely speculative, which can expose the investors to heightened risk.  It has also reiterated that Virtual Currencies have not been authorized by the Government or the Reserve Bank of India by way of licence nor it is recognized as a medium of exchange.  Subsequently another committee has been constituted under the Chairmanship of Secretary, DEA to study all  issues  related  with  virtual  currencies  and  recommend  specific measures to address the concerns.

Given that the Bitcoin trade is growing in the country, the Reserve Bank of India has also issued cautionary advice to the users, holders and traders  of  Virtual    Currencies  (VCs)  including  Bitcoins  about  the potential financial, operational, legal/customer protection and security related risks that they are exposing themselves to.  Further, Reserve

Bank of India has also advised that it has not given any licence/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.

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