SEBI, known as the market watchdog is preparing to take actions on illegal 'initial coin offers' where there are promises made to get high returns through their public investments on Bitcoins and other virtual currencies without the presence of any regulatory regime.
The top officials say that Bitcoins or any such crypto currencies are not approved by the RBI or any other such agencies, though they are offered on few exchanges with no rules in this regard. Moreover, SEBI is not really keen to take action as a regulator for such 'trading'.
SEBI, is not allowed to make unlawful promises to the gullible investors as there are fraudulent instances where they are not actually minting any such virtual currencies.
The top officials say that they require very complex algorithms, to mint these cryptocurrencies.
“The 'coin offerings' made in India are nothing but fraudulent Ponzi or pyramid schemes, including some offering secondary trading in Bitcoins or other established virtual currencies, while many others are plain frauds without any such currency actually being in play” they added.
RBI has clearly made disapproval, while the tax authorities gave out collected information on lakhs of companies including HNIs that have traded here from the recently conducted searches at different exchanges.
This has put the government bodies and the regulators in a state of dilemma, as to whether to impose tax or not. Here, imposing taxes would drive to giving legal status to such currencies resulting in huge risks like terrorist financing, money laundering and other similar activities.
The RBI has warned Indians since 2013 when the first surge of Bitcoins in India. Now, significantly the risks have multiplied along with the growth of such virtual currencies and a rapid growth in Initial Coin Offerings (ICOs).