India's biggest Bitcoin trading platform said on its website Friday it
had suspended operations after the central bank warned against the risks
of using virtual money.
BuySellBitCo.in closed its platform, citing
an advisory by the Reserve Bank of India issued on Christmas Eve
highlighting the risks of trading in digital currencies.
suspending buy and sell operations until we can outline a clearer
framework with which to work," BuySellBitCo.in said on its website,
adding the move was "to protect the interest of our customers".
(Also see: Bitcoin operators start shutting down in India, following RBI advisory)
central bank's warning comes after Bitcoin, which can be stored either
virtually or on a user's hard drive and offers a largely anonymous
payment system, had begun gaining popularity in India.
emergence of Bitcoin and other virtual currencies in India has come
despite a traditional preference for assets backed by property and other
"There is no underlying or backing of any asset
for virtual currencies and as such their value seems to be a matter of
speculation," the bank said in its December 24 advisory.
(Also see: Bitcoin, other virtual currencies potentially risky, and not authorised: RBI)
The "huge volatility in the value of virtual currencies has been noticed", it added.
The central bank stopped shy of issuing a ban on Bitcoin or other virtual currencies.
because the currencies were not authorised by any monetary authority
there was no established recourse for customers in the case of problems,
the bank noted.
The move comes weeks after the People's Bank of
China ordered financial institutions not to provide Bitcoin-related
services and cautioned against its potential use in money-laundering.
was invented in the wake of the global financial crisis by a mysterious
computer guru using the pseudonym Satoshi Nakamotoby.
At the last
rate posted by BuySellBitCo.in, which was conducting about 12 million
rupees worth of Bitcoin transactions monthly, according to Indian media,
one Bitcoin was selling for 48,039 rupees ($776).
worth of a Bitcoin has rocketed from just cents in 2010 to a $1,200 peak
in early December, but has since fallen back.
Bitcoin trading exchanges have emerged in the last few months, allowing
Indian users to purchase Bitcoin using the local rupee currency.
Reserve Bank of India noted several media reports of the use virtual
currencies, including Bitcoins, for unspecified illegal activities in
The absence of information around who is
trading in the currency could expose users to "unintentional breaches of
anti-money laundering and combating the financing of terrorism laws,"
the bank added.
An end-of-year report by Kaspersky Security
Bulletin said there appears "little doubt they (e-currencies) are also
popular with cybercriminals, who are looking at ways to evade the law".
It suggested governments may crack down "on the (virtual currency) exchanges in a bid to put a stop to their illicit usage".
though India's central bank issued no formal ban on e-currencies, The
Hindu newspaper quoted an unnamed senior banking official as saying most
virtual currency exchanges in the country saw the RBI advisory as a
precursor of a potential clampdown