RBI Looking at Cryptocurrencies, Uncomfortable With Bitcoins: Sen

Virtual currencies like Bitcoins pose potential financial, legal, customer protection and security-related risks.

Bitcoin value is growing rapidly, prompting many startups to launch coin wallets. 

(Photo: Pixabay)

The Reserve Bank of India is uncomfortable with "non-fiat" cryptocurrencies like Bitcoin, executive director Sudarshan Sen said on 13 September.

Elaborating on what non-fiat cryptocurrency is, Sen said:

Bitcoins for example. It’s a private cryptocurrency. The fiat cryptocurrency is a digital currency which will be issued by the RBI in place of the physical one at present.

He added that the central bank was studying this aspect at present.

"Right now, we have a group of people who are looking at fiat cryptocurrencies, something that is an alternative to the Indian rupee, so to speak. We are looking at that closely," Sen said.

RBI Flags Concerns About Cryptocurrencies

The RBI has repeatedly been cautioning about the use of cryptocurrencies, flagging a slew of concerns.

According to some media reports, there have been a growing number of investors in such currencies over the last few years, especially with the huge spurt in their value since Donald Trump took charge as President of the Unites States.

The RBI has been repeatedly flagging concerns on virtual currencies like Bitcoins, stating that they pose potential financial, legal, customer protection, and security-related risks

Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk.

RBI cautioned on its website in February.

"I believe its potential is being overstated. We can see that in these types of solutions for virtual currency, there is no central bank or monetary authority," RBI's then Deputy Governor R Gandhi had said on March 2 this year.

"The value seems to be a matter of speculation. There is definitely no legal status. While this is a purported objective of a virtual currency, it puts a natural limit for its progression. And finally, the usage of virtual currency for illicit and illegal activities has been reported as uncomfortably large," Gandhi had said.

(With inputs from PTI)