The police on Monday warned investors against the use of cryptocurrencies and said that the Central Bank has not given licence or authorisation to any company to deal in such currencies.
Cryptocurrency is neither a currency as per the definition of currency in India nor a derivative. It is a virtual currency akin to goods such as gold or precious metals which behaves more like assets.
Most cryptocurrencies, including bitcoin, ripple, litecoin and ethereum, are not backed by a sovereign guarantee, and therefore not considered as legal tender. Further, unlike other investment avenues, cryptocurrencies are not regulated by government entities nor does a regulatory body watch over it. EOW further noted that Investors have no authority to redress their grievances because the government does not recognise cryptocurrencies as legal tender.
The Reserve Bank of India has repeatedly cautioned users, holders and traders of virtual currencies regarding various risks.