RBI cautions users of digital currencies like Bitcoins, litecoins etc

The Reserve Bank of India cautioned the general public that users or traders of virtual currencies are doing so at their own risk. RBI in its press release today said that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency.

The digital currencies like Bitcoins, litecoins, bbqcoins, dogecoins etc. are known as Decentralised Digital Currencies or Virtual Currencies (VCs). These currencies are also known as electronic wallets. Since the currencies are stored in digital/electronic media they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Therefore, the Central Bank of the country advises that users or traders of virtual currencies are exposed to financial, operational, legal, customer protection and security related risks.

The government which is in principle responsible for currency notes and coins issued by it, is answerable to its citizen get their value by dint of regulation or law. For example, RBI holds the standby assets like net credit to the government, credits to commercial banks and its Net Foreign Exchange Assets etc., along with gold reserves which fully covers as assets against the notes and coins under circulation to the public. However, e-wallet is not created or traded through any authorised central registry or agency, the loss of such currencies could result in the permanent loss to the holders of them.