RBI spokesperson misunderstands what "legal tender" refers to?

[Stephen Gornick]

The recent article by Ankit Ajmera had this:

The Reserve Bank of India, for instance, has not yet formulated regulations to govern trading or profits generated from Bitcoins. An RBI spokesperson told Mirror over email that the RBI doesn't consider Bitcoin legal tender and, therefore "trading in Bitcoin is not legal. Obviously, there cannot be regulations from RBI for an illegal activity. People who use it, do so at their own risk and responsibility."

 - http://www.mumbaimirror.com/others/sunday-read/Bitcoin-billionaires/articleshow/23236886.cms

In the U.S., legal tender refers to what forms of money cannot be refused by a creditor for extinguishing a debt.  Legal tender does not dictate what can be used as money or currency.

Is the use of this term different in India?

This was in quotes, so presumably this is what Mr. Ajmera received in the e-mail from the RBI.

I can't believe a person would be spokesperson for RBI and have misunderstood what the term "legal tender" refers to, but it is possible.

Has anyone inquired (or if not, would anyone inquire) with the reporter and/or the RBI spokesperson to get clarification on this?

[Benson Samuel]

The recent article by Ankit Ajmera had this:

The Reserve Bank of India, for instance, has not yet formulated regulations to govern trading or profits generated from Bitcoins. An RBI spokesperson told Mirror over email that the RBI doesn't consider Bitcoin legal tender and, therefore "trading in Bitcoin is not legal. Obviously, there cannot be regulations from RBI for an illegal activity. People who use it, do so at their own risk and responsibility."

 - http://www.mumbaimirror.com/others/sunday-read/Bitcoin-billionaires/articleshow/23236886.cms

In the U.S., legal tender refers to what forms of money cannot be refused by a creditor for extinguishing of a debt.  Legal tender does not dictate what can be used as money or currency.

Is the use of this term different in India?

This was in quotes, so presumably this is what Mr. Ajmera received in the e-mail from the RBI.

I can't believe a person would be spokesperson for RBI and have misunderstood what the term "legal tender" refers to, but it is possible.

Has anyone inquired (or if not, would anyone inquire) with the reporter and/or the RBI spokesperson to get clarification on this?

Will mail the reporter and check.

[Benson Samuel]

Yes he did. Sorry for not posting the clarification, but he was very prompt in responding.
Please find below some parts of the mail trail.

Dear Benson,

Thanks for sharing the link. To answer your query, it seems the RBI is not clear or doesn't yet want to take a stand on how it would like to regulate Bitcoin in India. Below in the email I have attached the reply I got from Alpana Killawala, Principal Chief General Manager, Department of Communication, RBI. It's the same quote we printed in the Mumbai Mirror story. On probing, the spokesperson did not provide clarification on the 'legal tender' bit of it. However, she told us "off the record" that there cannot be criminal proceeding against people who possess or deal in Bitcoins unless a fraud gets reported with the police.

In an earlier report on Bitcoins that appeared in The Economic Times in the month of August this year, an RBI spokeswoman was quoted as saying, "As of now we are watching and learning about the developments in Bitcoins but are not regulating it." Link: http://articles.economictimes.indiatimes.com/2013-08-14/news/41409715_1_bitcoin-gox-virtual-currency.

So, we might have to wait for a while to get clarity on the same.

Regards,

Ankit Ajmera

E-mail from RBI:

Subject:   RE: Email from Mumbai Mirror - regarding regulations on Bitcoins
Date:   2013-09-27 16:45
Sender:   "Killawala, Alpana"
Recipient:   Ankit Ajmera
 

Dear Ankit

Bitcoin is not legal tender and trading in Bitcoin is therefore not legal. Obviously there cannot be regulations from RBI for an illegal activity. People who use it, do so at their own risk and responsibility.

You can use this as RBI response as in “In response to an email query from Mumbai Mirror, RBI said....

Regards

alpana

 

 

Alpana Killawala

Principal Chief General Manager

Department of Communication

Reserve Bank of India

[escrow.ms]

That's why an "exchange" in india isn't good.

[Benson Samuel]

That's why an "exchange" in india isn't good.

As Stephen Gornick had mentioned in the OP, mebbe they have not understood it yet.

[escrow.ms]

That's why an "exchange" in india isn't good.

As Stephen Gornick had mentioned in the OP, mebbe they have not understood it yet.

Yeah i know, they have not understood it yet,.
Because once they do, they will try to regulate it and it won't be good for us.

[Benson Samuel]

That's why an "exchange" in india isn't good.

As Stephen Gornick had mentioned in the OP, mebbe they have not understood it yet.

Yeah i know, they have not understood it yet,.
Because once they do, they will try to regulate it and it won't be good for us.

Bitcoin offers the possibility of 2 scenarios.

We know that it cannot be completely regulated due to its characteristics, however there is a group of businesses and business owners who like regulation and their way of life.
RBI swooping in, will assist those groups of businesses to get onto Bitcoin a lot faster.

On the other hand, those who do not wish to follow regulation or 'paperwork' will still get their 'pound of flesh'.

There is no way to cover all grounds or even police 1% of Bitcoin transactions. Especially when there is no monetary reward for the policing agency.

[maurya78]

A modicum of regulation is inevitable and (let's be honest) probably good for early adopters as it bids up the value of their holdings

Think the RBI is waiting for the USA and China to take a clear position first so they can calibrate a position off that

Wait and Watch

[buysellbitcoin]

Well regulations are good. Regulations are there mostly to get consumer protection. Think once if IRDA is not there what will happen in insurance sector. If TRAI is not there what will happen in telemarketing sector. There might be difference in opinion in their execution or effectiveness, but they are needed for sure.

Regards

[inrbtcad]

Well regulations are good. Regulations are there mostly to get consumer protection. Think once if IRDA is not there what will happen in insurance sector. If TRAI is not there what will happen in telemarketing sector. There might be difference in opinion in their execution or effectiveness, but they are needed for sure.

Regards

Regulation as a general principle is required when a significant portion of people/businesses are using a new kind of service/product. Regulation is promulgated to ensure that the interested entities act in a fair and transparent manner.

Most of the Govt Organisations all across the world act on a similar basis.

Given that bitcoin has not touched even 0.1% of Indian population, I am pretty sure RBI is acting rightly when they say "watching and learning".


Let us hope that bitcoin crosses the minimum threshold and regulation is introduced. By that time some of entities who are already dealing with Bitcoins will be asked to follow the regulations and at the same time will be given enough time to adhere to them.

[subvolatil]

Well regulations are good. Regulations are there mostly to get consumer protection. Think once if IRDA is not there what will happen in insurance sector. If TRAI is not there what will happen in telemarketing sector. There might be difference in opinion in their execution or effectiveness, but they are needed for sure.

Regards

Regulation as a general principle is required when a significant portion of people/businesses are using a new kind of service/product. Regulation is promulgated to ensure that the interested entities act in a fair and transparent manner.

Most of the Govt Organisations all across the world act on a similar basis.

Given that bitcoin has not touched even 0.1% of Indian population, I am pretty sure RBI is acting rightly when they say "watching and learning".


Let us hope that bitcoin crosses the minimum threshold and regulation is introduced. By that time some of entities who are already dealing with Bitcoins will be asked to follow the regulations and at the same time will be given enough time to adhere to them.

Well i  have  always  been  anti regulation. it  is only  made  to  profit  the  richest  companies and  individual and  does not   take into consideration  the  population. IRDA and TRAI  makes  it  impossible  for  a  one  man  enterprise  to  enter  that  sector  and  innovate  and provide  proper  growth. It  usually  stagnates  growth and  progress of a  particular  sector.   Government  regulation in  full  transparency  of public  review and  implementation is  the only   way  a   regulation  will work, in India that will never  happen , its  to  corrupt.