Corporates join bitcoin-brigade to lobby for digital currency

As more bitcoin operators shut shop in India on fears of regulatory and enforcement actions, some large corporates are believed to have begun lobbying hard with regulators and government departments in favour of 'digital currency'.

While none of these groups are as yet into bitcoin business, some of them may be interested in setting up their own 'virtual currency' platforms, a senior official said.

The point being advocated by such companies before the regulators and policymakers is that the world of banking and financial transactions may eventually move beyond the current brick-and-mortal model to the digital world, the official said, but refused to divulge any names.

Their representatives are believed to be putting across their views through meetings with top officials at the concerned regulatory authorities and government departments, while also suggesting a proper legal and regulatory framework for operations relating to digital currencies.

The regulatory glare has intensified on bitcoins in recent weeks due to possible money laundering, cyber security and other risks, while many operators have suspended their operations after RBI's warning against use of such currencies.

Some of these operators have also approached RBI for clarifications and have requested it to put in place a proper regulatory framework for 'genuine' virtual currencies.

Bitcoin, the biggest among all virtual currencies, can be generated through complex computer software systems with solutions shared on a network, although the process is complex and such 'mining' can be done only on very powerful servers.

Within four years of coming into existence, bitcoin has become the world's most expensive currency and its per unit value soared past $1,200 level or about Rs 63,000 in November 2013. After slipping below Rs 50,000 level recently, the prices have again moved back to over Rs 60,000 a unit.

There are already close to 70 virtual currencies available across the world with total market valuation of about USD 15 billion (about Rs 90,000 crore), out of which Bitcoin is the biggest with over USD 11 billion value.

While bitcoin operators are expecting clear regulatory clarifications that virtual currencies are not illegal per se, experts say such hopes are futile given that these currencies are saddled with number of significant risks at the moment.

There have been regular reports of cyber criminals hacking and stealing virtual currencies across the world.

On top of that, different virtual currencies continue to pop up almost everyday exposing users to unintended risks and also losses arising out of scams perpetrated by cyber criminals looking to make a quick buck.

A grouping in the name of Bitcoins Alliance India (BAI) has also been formed and it has appointed Nishith Desai Associates, an international Legal and Tax Counsellors, to examine the legality of bitcoins.

There are an estimated 30,000 bitcoin holders in the country, currently in possession of 1% of around 12 million bitcoins in circulation across the globe.