New Delhi: The use of virtual currencies, such as Bitcoin, is not authorized by the banking regulator Reserve Bank of India (RBI) and could result in breach of anti-money laundering provisions, the government said on Tuesday.
“The absence of counter parties in usage of virtual currencies, including Bitcoin, for illicit and illegal activities in anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws," Arjun Ram Meghwal, minister of state for finance in the National Democratic Alliance (NDA) government, said in a written reply to Rajya Sabha.
Meghwal further said the creation of virtual currencies such as Bitcoin as a medium of payments is not authorized by any central bank or monetary authority.
“No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities," Meghwal said.
RBI has already cautioned users, holders and traders of virtual currency, including Bitcoin, about the potential financial, legal and security risks arising from the usage.