5 ms·

Reserve Bank of India Cautions Users of Virtual Currencies Against Risks [pdf]

61 points by wsxcde 13y ago

theboywho 13y ago
>> 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.
- steveklabnik 13y ago
  I mean, it's a coin just like any other...
- im_a_bug 13y ago
  Dogecoin is as "real" as Bitcoin, or USD for that matter.
  - theboywho 13y ago
    I called it "parody" and not "fake"
    - chc 13y ago
      You asked if they thought it was real. It is real, so if they think that, they are correct.
      - theboywho 13y ago
        Are you saying Dogecoin is not a pardoy?
- svenkatesh 13y ago
  Your insecurity is showing.
- techtivist 13y ago
  It might have started that way but Dogecoin has seen a surge in trading recently, and a growing "legitimate" user base recently https://bitcointalk.org/index.php?topic=361813.0 https://bitcointalk.org/index.php?topic=361813.0 So it's completely fair to name it among the likes of Bitcoin and Litecoin.
ShirsenduK 13y ago
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.
- eloisius 13y ago
  Also, services like Bitrated are providing decrebtralized consumer production.
- INTPenis 13y ago
  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 13y ago
    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.
- skybrian 13y ago
  I'd say it's neither a feature nor a bug; it's just different in a way that's partially incompatible with credit-based payment schemes. This incompatibility shows up with Coinbase, where they require a bank account number and a credit card number and identity verification to buy Bitcoin instantly because they're bridging the gap and have no recourse if someone scams them. Not exactly peer-to-peer or anonymous. Payment companies like credit card issuers or Paypal do a lot of policing of shady vendors and shady customers. If you're just using cash then it's buyer beware. But on the other hand, it allows you to make a payment when a bank wouldn't allow it.
tankenmate 13y ago
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 13y ago
  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-a-national-sport-07282011.html http://www.businessweek.com/magazine/in-india-tax-evasion-is... 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.
  - throwawaykf03 13y ago
    Related to this point, India also has pretty big problems with black money and the black market. Bitcoin is not going to make it better.
  - wsxcde 13y ago
deleted 13y ago
[deleted]
rikacomet 13y ago
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 13y ago
  Could you provide more info on what RBI did with regards to PayPal?
  - techtivist 13y ago
    Here's what they did http://techcrunch.com/2011/01/28/reserve-bank-of-india-restricts-paypal-payments-to-merchants-to-under-500/ http://techcrunch.com/2011/01/28/reserve-bank-of-india-restr... but later relaxed a bit http://gadgets.ndtv.com/internet/news/paypal-now-allows-indian-merchants-to-receive-up-to-10000-in-one-transaction-398520 http://gadgets.ndtv.com/internet/news/paypal-now-allows-indi...
- vishnugupta 13y ago
  Could you please elaborate on Paytm? From what I see on their site they are more of utility payments site than true paychannel. Perhaps payzippy or payu are better examples?
sriramk 13y ago
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.
- deleted 13y ago
  [deleted]
acd 13y ago
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-inflation/cpi-inflation-india.aspx http://www.inflation.eu/inflation-rates/india/historic-infla...
kszx 13y ago
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-star-economist-put-charge-indias-central-bank-out-frying-pan http://www.economist.com/news/finance-and-economics/21583275...
Kilo-byte 13y ago
timely caution Millions of Dogecoin stolen in Christmas hack http://www.theverge.com/2013/12/26/5244604/millions-of-dogecoin-stolen-in-christmas-hack http://www.theverge.com/2013/12/26/5244604/millions-of-dogec...

61 points by wsxcde 13y ago

>> 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.

steveklabnik 13y ago
I mean, it's a coin just like any other...
im_a_bug 13y ago
Dogecoin is as "real" as Bitcoin, or USD for that matter.
- theboywho 13y ago
  I called it "parody" and not "fake"
  - chc 13y ago
    You asked if they thought it was real. It is real, so if they think that, they are correct.
    - theboywho 13y ago
      Are you saying Dogecoin is not a pardoy?
svenkatesh 13y ago
Your insecurity is showing.
techtivist 13y ago
It might have started that way but Dogecoin has seen a surge in trading recently, and a growing "legitimate" user base recently https://bitcointalk.org/index.php?topic=361813.0 https://bitcointalk.org/index.php?topic=361813.0 So it's completely fair to name it among the likes of Bitcoin and Litecoin.

ShirsenduK 13y ago

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.

eloisius 13y ago
Also, services like Bitrated are providing decrebtralized consumer production.
INTPenis 13y ago
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 13y ago
  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.
skybrian 13y ago
I'd say it's neither a feature nor a bug; it's just different in a way that's partially incompatible with credit-based payment schemes. This incompatibility shows up with Coinbase, where they require a bank account number and a credit card number and identity verification to buy Bitcoin instantly because they're bridging the gap and have no recourse if someone scams them. Not exactly peer-to-peer or anonymous. Payment companies like credit card issuers or Paypal do a lot of policing of shady vendors and shady customers. If you're just using cash then it's buyer beware. But on the other hand, it allows you to make a payment when a bank wouldn't allow it.

tankenmate 13y ago

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 13y ago
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-a-national-sport-07282011.html http://www.businessweek.com/magazine/in-india-tax-evasion-is... 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.
- throwawaykf03 13y ago
  Related to this point, India also has pretty big problems with black money and the black market. Bitcoin is not going to make it better.
- wsxcde 13y ago

deleted 13y ago

[deleted]

rikacomet 13y ago

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 13y ago
Could you provide more info on what RBI did with regards to PayPal?
- techtivist 13y ago
  Here's what they did http://techcrunch.com/2011/01/28/reserve-bank-of-india-restricts-paypal-payments-to-merchants-to-under-500/ http://techcrunch.com/2011/01/28/reserve-bank-of-india-restr... but later relaxed a bit http://gadgets.ndtv.com/internet/news/paypal-now-allows-indian-merchants-to-receive-up-to-10000-in-one-transaction-398520 http://gadgets.ndtv.com/internet/news/paypal-now-allows-indi...
vishnugupta 13y ago
Could you please elaborate on Paytm? From what I see on their site they are more of utility payments site than true paychannel. Perhaps payzippy or payu are better examples?

sriramk 13y ago

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.

deleted 13y ago
[deleted]

acd 13y ago

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-inflation/cpi-inflation-india.aspx http://www.inflation.eu/inflation-rates/india/historic-infla...

kszx 13y ago

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

Kilo-byte 13y ago

timely caution Millions of Dogecoin stolen in Christmas hack http://www.theverge.com/2013/12/26/5244604/millions-of-dogecoin-stolen-in-christmas-hack http://www.theverge.com/2013/12/26/5244604/millions-of-dogec...