Govt examining various aspects of virtual currencies
New Delhi : The committee appointed by the government last year to examine issues related to crypto currency has submitted its report and examining pros and cons, including launching of its own crypto currency, a top legal affair ministry official said here on Thursday.
While addressing the ‘2nd Global Summit P2P Digital Asset System,’ organised by industry body ASSOCHAM, Ministry of Law and Justice Additional Secretary Anadee Nath Mishra said the government is also looking into the allegations that people, who had black money, had diverted the same to crypto currencies in India, during the period of demonetisation.
It was reported that during the period of demonetisation, lakhs of people had used illegal money in bitcoins and that’s the main factor, which attributed for sudden increase in the prices of bitcoins. The government is also examining the use of black money, Mr Mishra said.
There has been a phenomenal increase in recent times in the price of virtual currencies (VCs), including bitcoin, in India and globally. The VCs don’t have intrinsic value and are not backed by any kind of assets, the official added.
The price of bitcoin and other VCs, therefore, is a matter of mere speculation, resulting in spurt and volatility in their prices. There is real risk of investment bubble of the type in ponzi schemes, which can result in sudden and prolonged crash exposing investors, especially retail consumers, losing their hard-earned money, he said.
Consumers need to be alert and extremely cautious as to avoid getting trapped in such ponzi schemes, said Mr Mishra.VCs are stored in digital/ electronic format, making them vulnerable to hacking, loss of password and malware attack, which may also result in permanent loss of money, he added.
As transactions of VCs are encrypted, they are also likely being used to carry out illegal activities, such as terror-funding, smuggling, drug trafficking and other money-laundering acts, added the additional secretary.
He said there were reports that people who couldn’t convert their money, use this channel to launder their illegal money and it could have been one of the reasons for the sudden rise in the value of bitcoins.
The Income Tax (IT) department has also carried out inquiries and notices have been issued to a number of people, who have transacted in bitcoins and have been asked to make payment of taxes, if they had made any profit out of it.
”The policy of the Union government is extremely cautious right now, but we are actually calling it illegal, but there is always a difference between legality and tax availability,” said Mr Mishra.