NEW DELHI India (Xinhua) --
India government Friday cautioned
people especially investors about risks of trading in virtual
currencies (VCs) or cryptocurrencies such as Bitcoin, officials
"There has been a phenomenal increase recently in the price
of VCs including Bitcoin, in India and globally.
"The VCs don’t have any intrinsic value and are not backed by
any kind of assets.
"The price of Bitcoin and other VCs therefore is entirely a
matter of mere speculation resulting in spurt and volatility in
their prices," a statement issued by India’s finance ministry
The ministry said VCs are not backed by government decree and
described them as Ponzi schemes.
"There is a real and heightened risk of investment bubble of
the type seen in Ponzi schemes which can result in sudden and
prolonged crash exposing investors, especially retail consumers
losing their hard-earned money," the ministry officials said.
"Consumers need to be alert and extremely cautious as to
avoid getting trapped in such Ponzi schemes."
A Ponzi scheme is a form of fraud in which belief in the
success of a non-existent enterprise is fostered by the payment
of quick returns to the first investors from money invested by
Bitcoin, has emerged as world’s biggest and best-known
cryptocurrency and has gained more than 19-fold this year.
"The government also makes it clear that VCs do not have any
regulatory permission or protection in India.
"The investors and other participants therefore deal with
these VCs entirely at their risk and should best avoid
participating therein," the finance ministry officials said.
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