Govt steps up vigil on bitcoin transactions

The government is keeping a close watch on companies dealing with bitcoins to ensure that such transactions are not used to collect funds from gullible public.
Bitcoin -- a virtual currency whose value has been soaring in international markets in recent months -- is yet to be brought under any regulatory framework in India.
The Corporate Affairs Ministry is now keeping a close watch on companies as to whether they are getting into bitcoin transactions.
The ministry, which implements the companies law, has instructed the SFIO, regional directors as well as the Registrar of Companies to gather details about firms involved in bitcoin dealings, according to a recent communication.

The Serious Fraud Investigation Office (SFIO) comes under the ministry.
The communication was sent earlier this month by the ministry to Lok Sabha MP and BJP leader Kirit Somaiya who had raised concerns about illegal exchange and trading of bitcoins in the country.

These instructions have been issued to see "if the investors/ depositors/ public or stakeholders are being prejudicially affected and/ or such companies are using this mode of investment to lure the gullible public in collecting funds".
In case they come across companies indulging in bitcoin transactions, the regional directors and Registrar of Companies have been asked to discuss the same in the State Level Coordination Committee (SLCC) meetings organised by the Reserve Bank and in the Regional Economic Intelligence Committee (REIC) meetings.

While entities have been dealing with bitcoins, there are concerns over risks associated with such currencies and the possibility of them being used to dupe investors.
Use of virtual currencies, including bitcoins, has not been authorised by the Reserve Bank, which has also warned that any user, holder, investor and trader dealing with them would be doing so at his/her own risk.
The issue of companies getting into bitcoin transactions was also raised by ruling BJP members at a recent meeting of the Parliamentary Standing Committee on Finance.
In March, the Finance Ministry had constituted an Inter- Disciplinary Committee to take stock of the present status of virtual currencies both in India and globally and suggest measures for dealing with them.

The government has also sought comments from the public on whether virtual currencies should be banned, regulated or subjected to self-regulation.
Suggestions have also been invited on how virtual currencies should be regulated and monitored.
"In case virtual currencies are not suggested to be regulated: What should be the effective self-regulatory mechanism? (and) What measures should be adopted to ensure consumer protection in this scenario?," as per questions posted on the MyGov platform.