Bitcoin community of India. Now the Indian version of Bitcoins named Laxmicoin has felt the pressure of legal uncertainty surrounding virtual currencies like Bitcoin and Laxmicoin. This is more so after the Reserve Bank of India (RBI) declared that Bitcoins are vulnerable to various sorts of risks including legal risks.
According to Hindu, Laxmicoin has adopted a cautious approach and has decided to with till legal uncertainties are over. However, this may take considerable time keeping in mind the slow pace at which regulatory issues are resolved by India.
Bitcoins websites in India are already under regulatory scanner of Enforcement Directorate (ED). ED believes that Bitcoins money can be used for hawala transactions and funding terror operations and this seems to be a legally plausible explanation as well. Even RBI has expressly said that dealings in Bitcoins in India subject to legal risks.
Many Bitcoins entrepreneurs have suspended their operations till Indian regulatory authorities come up with a clear cut regulatory framework. Those who are functioning are working with the clear understanding that they can be prosecuted by Indian regulatory authorities wherever they are found to be breaching Indian laws. Laxmicoin has preferred the former approach that is more conservative in nature.
According to posts on Laxmicoin’s Twitter page, its launch has been delayed due to “regulatory clarifications” and they hope to have clear guidelines from government soon. They further said that they have written to authorities and are waiting for their replies to avoid any “problems“.
Various operators are expecting clear regulatory clarifications that virtual currencies are not illegal per se but according to Perry4Law, the leading techno legal ICT law firm of Asia, Bitcoins website owners and entrepreneurs must comply with Indian laws to stay legal. The virtual currencies are saddled with number of significant financial, cyber security and legal risks at the moment. The research paper titled Cyber Law Due Diligence in India and E-Commerce Businesses (PDF) issued by Perry4Law has aptly described the cyber law due diligence requirements that Bitcoin websites in India are required to follow.
There have been regular reports of cyber criminals hacking and stealing virtual currencies across the world. More and more legal violations are being reported these days. In the past there have been many media reports of the usage of Bitcoins for illicit and illegal activities in several jurisdictions. Now it has been reported that some Indian tea traders violated Indian laws by engaging in illegal Bitcoin transactions.
Further, different virtual currencies continue to pop up almost every day, exposing users to unintended risks and losses arising out of scams perpetrated by cyber criminals, cyber security experts say. It is high time for Bitcoins entrepreneurs to comply with Indian laws before indulging in Bitcoins dealings in nay manner whatsoever.