Lok Sabha Question No. 519 (UNSTARRED), answered on 2018-07-20
Subject: Bitcoin Companies
Ministry: CORPORATE AFFAIRS
Asked by: POONAMBEN HEMATBHAI MAADAM

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 519 ANSWERED ON FRIDAY, THE 20th JULY, 2018 [ASHADHA 29, 1940 (SAKA)]

## BITCOIN COMPANIES

## QUESTION

## 519.  SHRIMATI POONAMBEN MAADAM:

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 and if so, the details thereof;
- (b) whether such companies are repeatedly violating rules laid down by the Government by not filing annual balance sheets; and
- (c)  if  so,  the  details  thereof  along  with  the  action  taken  against  such companies so far?

## ANSWER

MINISTER OF STATE FOR LAW AND                         (SHRI P. P. CHAUDHARY) JUSTICE AND CORPORATE AFFAIRS

- (a) to (c): Bitcoin is a type of unregulated digital currency that is issued and normally  controlled  by  its  developers  and  used  and  accepted  among  the members  of  the  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 had 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 an 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 his/her own risk. However,  in  the  case  of  one  company,  namely  M/s.  ZEB  IT  Services Private  Limited,  the  Ministry  of  Corporate  Affairs  has,  vide  order  dated 15/3/2018,  ordered  Inspection  of  books  of  accounts  u/s  206(5) of the Companies Act, 2013 to examine inter alia the aspect of dealing in Bitcoin.

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