At no point does the article state that virtual currency is banned in India. All the RBI did was issue a statement talking about the risks involved. These risks are already known to those of us who deal with, or have researched, virtual currency. But those who are new or uninformed, will definitely benefit from RBI's statement.
Every country will try to minimize money-laundering or illegal activities. Virtual currency is very difficult to trace; hence the scrutiny.
When they say that they may create some bitcoin related regulation, they are not saying that its going to be banned altogether. They just said that they are looking into it.
“The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws,” the bank warned.
All this is saying that the users could unintentionally breach these laws. Suppose I receive 500,000 in cash from a person. I do not wish to pay taxes on it. Since its cash, its not been reported to the government. If I find 10 to 15 bitcoin users willing to sell me bitcoins for cash, the individuals getting the cash are not getting enough to make ripples and cause the Income Tax department to look deeply into the source. Since I have bitcoins, I now have the ability to spend money that ideally should have been reported and taxed. This situation places the user in breach of the anti-laundering laws.
Similarly, in countries like India, which deal with terrorism constantly, the funding of terrorists by neighbouring nations or other hostile elements is a huge problem. Funding for terrorists is made difficult by keeping a close eye on large value transactions. How easy would it be to, lets say, set up a bitcoin gambling website, and use their funding network to funnel bitcoins (so as to make it difficult to track the source of bitcoins). These bitcoins can then be sent to any country where they can be distributed in small chunks to normal people, in exchange for cash. The people may never even realize that by purchasing bitcoins for cash, they could be funding an operation like this.
It is not a tool that is illegal. It is what can be done with it. This is the same reason owning weapons is illegal in most countries. You can perhaps trust one person with a gun. Can you trust that when one billion people own guns, no body is ever going to use them for any reason other than self-defense?
Similarly, you can perhaps trust a small community to use virtual currency responsibly, but can you trust everyone in the world to do so responsibly? No, and this is proven by the existence of occasional scammers even in these forums.
That said, please don't think that I am against virtual currency. I am completely fascinated by them, and am going to start mining them soon.
In my opinion, to completely ban virtual currency altogether, would definitely be a stupid thing to do. But I do believe that regulation in the form of perhaps prohibiting purchase/sale through hard cash, can be useful.
No, Bitcoin is about freedom. If goverment ban decentralized digital currencies, it just shows what they think about freedom
A small group of people who can conduct themselves responsibly may see freedom as an environment without rules. But when it comes to a large group, the same "lawless-freedom" will soon devolve into anarchy.
PS: I'm not trying to start a flame war here. This is just my opinion.
Let me know what you guys think about this. I would welcome a debate.
Cheers!
