
Reserve Bank of India Cautions Users of Virtual Currencies Against Risks [pdf] - wsxcde
http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPR1261VC1213.pdf
======
ShirsenduK
Its a feature, don't try to file it as a bug.

"Payments by VCs, such as Bitcoins, take place on a peer-to-peer basis without
an authorised central agency which regulates such payments. As such, there is
no established framework for recourse to customer problems / disputes / charge
backs etc."

And stopping payments is not the right way to address customer problems.

~~~
INTPenis
Yes and further I think every single bullet point can be said about regular
money.

Banks are not invulnerable to hacking.

If you get hustled for your pocket money in the street then the police will
have to find the perpetrator with any means at hand. Just because it's an
electronic currency does not mean anything is different here.

Are they trying to say that every single Indian citizen could withdraw their
money as gold or some equally valuable substance that they can equate to cash
money in society?

Wealth truly knows no god and no master, nor any border.

Beware of the propaganda, fear what you don't understand.

~~~
techtivist
This! Exactly the point I made above! Same issues plague "traditional" banks
and RBI has imposed very limited liabilities on Bank or even safeguards like
this one
[https://www.pcisecuritystandards.org/security_standards/](https://www.pcisecuritystandards.org/security_standards/).
So if the Target fiasco had happened in India, Target would have minimum if
any liabilities. Why do you think "cash on Delivery" is such a big thing in
India. Consumers are paranoid, not just because it's their habit, they just
feel vulnerable with no recourse even with traditional banking.

------
tankenmate
The main reason that India is concerned about this is it's ability to tax
foreign income of resident Indians. If bitcoin or other VCs allow people to
earn money overseas and then get paid in a complete "cash only" fashion it
could sidestep income tax.

~~~
bushido
It may be a reason, but it is not the main reason, not by a long shot.

India has a chronic problem of tax evasion, in the grand schemes of things
only a handful of their citizens can claim a defense/offense of "it's ability
to tax foreign income of resident Indians", since only a handful do not have
the ability to evade taxes or have never deliberately evaded taxes.

A quick search for "tax evasion in India" can educate on this topic, including
an article[0] that states "tax evasion is India's national sport."

My Indian friends tell me, that they don't feel bad evading taxes a little
since the politicians, bureaucrats etc would squander it through bribes and
scandals. To which I say, perhaps the main reason for rampant scams and
bribery is that taxes are evaded and these public employees are paid poorly.

[0] [http://www.businessweek.com/magazine/in-india-tax-evasion-
is...](http://www.businessweek.com/magazine/in-india-tax-evasion-is-a-
national-sport-07282011.html)

edit:

On re-reading my comment I realized that I was unclear why in it's current
scope RBI's main concern is not the scope of tax evasion. Currently India
looses over $300B to tax evasion each year, even if all of bitcoin's market
cap was taxable by India this would be a very small fraction of their tax
losses.

I believe the real reason lies in addressing customer grievances. India is
plagued by numerous scandals and scams in the private sector and the only
resort for most people is going to the consumer courts if they can afford it.
Their already few options would be obliterated if they choose to deal with
bitcoin.

While this may be a concern in the developed countries, its not nearly as bad
as the situation in India and similar economies.

~~~
sandGorgon
Actually there is a singular reason for the tax evasion and it has nothing to
do with people "wanting" something.

Real estate.

Some of India's real estate is priced as high as Manhattan, but the sale
process is murkier. The reported sale figure (for tax purposes) is much lower
than the actual sale figure. This is very interesting for people used to
Zillow - why would someone agree to a transaction like this? How does the
actual exchange take place without any backing paperwork?

In fact, there are people who claim that there is a physical bundle of a few
billion dollars that keep changing hands as people sell and buy real estate -
pretty much a closed system. There have been many attempts by startups to pull
a Zillow in India, but most of them failed (including one I was associated
with).

Now here's the interesting point about bitcoin - I mentioned above that the
current real estate market is a closed system. The Indian govt has taken a
series of rightfully justified steps to eliminate physical cash from the
financial system - in India, you need to pay a charge to withdraw cash from a
bank and also fill in extra paperwork. This ensures no new cash enters the
real estate system.

Bitcoin could potentially upset the system.

~~~
sumedh
> but most of them failed (including one I was associated with).

What was the name of your startup. Housing.com is doing a pretty job imho.

~~~
sandGorgon
most of them are doing well - but NOT in the Zillow segment. It is when you
start wading in the murky waters of Indian secondary real estate sales, that
you hit all these issues.

My work history is in my profile.

------
rikacomet
Well in the past,RBI has shown no remorse towards online currency, for example
Paypal.

They had a free run, until RBI got into the scene. Now their business is as
good as nothing.

It allowed many Indian paychannels to emerge though, Paytm is a good example.

Indian financial policy makers tend to have a "safe and proven first" attitude
towards such things. No wonder, we fairly did better than many european
countries, during the 2007-08 subprime losses fallout. Not a single bank
defaulted, ICICI which had the highest exposure(if my memory serves me right),
was still in black even after the write-off.

~~~
svenkatesh
Could you provide more info on what RBI did with regards to PayPal?

~~~
techtivist
Here's what they did [http://techcrunch.com/2011/01/28/reserve-bank-of-india-
restr...](http://techcrunch.com/2011/01/28/reserve-bank-of-india-restricts-
paypal-payments-to-merchants-to-under-500/) but later relaxed a bit
[http://gadgets.ndtv.com/internet/news/paypal-now-allows-
indi...](http://gadgets.ndtv.com/internet/news/paypal-now-allows-indian-
merchants-to-receive-up-to-10000-in-one-transaction-398520)

------
sriramk
I came here expecting something stupid but this doc isn't completely
unreasonable. From the perspective of warning newbies or my mother (say) about
investing in bitcoin, it does a fair job. Or rather, it could have been far,
far worse.

------
acd
I think the Reserve Bank of India is afraid of the Indian Rupies inflationary
past and that Bitcoin might offer a better alternative. Inflation is but a
hidden tax of the populations wealth.

Historic inflation data for India [http://www.inflation.eu/inflation-
rates/india/historic-infla...](http://www.inflation.eu/inflation-
rates/india/historic-inflation/cpi-inflation-india.aspx)

------
kszx
Worth noting that RBI's current governor is Raghuram Rajan (since September),
Chicago Booth's "star professor" and one of the world's most famous
economists. Also known for saying that "innovation had made finance more
dangerous." (in 2005).

[http://www.economist.com/news/finance-and-
economics/21583275...](http://www.economist.com/news/finance-and-
economics/21583275-star-economist-put-charge-indias-central-bank-out-frying-
pan)

------
theboywho
>> The Reserve Bank has mentioned that it has been looking at the developments
relating to certain electronic records claimed to be “Decentralised Digital
Currency” or “Virtual Currency” (VCs), such as, Bitcoins, litecoins, bbqcoins,
dogecoins etc., their usage or trading in the country and the various media
reports in this regard.

Dogecoins? Seriously? They are thinking the dogecoin parody is real?

I am wondering if the people behind this study knew what they were doing or if
they just "googled" it.

~~~
im_a_bug
Dogecoin is as "real" as Bitcoin, or USD for that matter.

~~~
theboywho
I called it "parody" and not "fake"

~~~
chc
You asked if they thought it was real. It is real, so if they think that, they
are correct.

~~~
theboywho
Are you saying Dogecoin is not a pardoy?

------
Kilo-byte
timely caution

Millions of Dogecoin stolen in Christmas hack
[http://www.theverge.com/2013/12/26/5244604/millions-of-
dogec...](http://www.theverge.com/2013/12/26/5244604/millions-of-dogecoin-
stolen-in-christmas-hack)

