Indian official: Bitcoin has characteristics of 'parallel currency', government should make it illegal

An Indian politician who has expressed concerns about the development of Bitcoin in the country has again urged the Indian government to review the legal status of the cryptocurrency. The Bitcoin critic directly said that the Indian government should define it as illegal.

Kirit Somaiya, a member of the Indian parliament from the ruling Bharatiya Janata Party (BJP), questioned whether Bitcoin is a "Ponzi scheme" during a meeting on March 24. Citing the opinions of unnamed experts, the politician expressed his concerns that the world's most important cryptocurrency is a Ponzi scheme and called on Indian financial regulators to regulate Bitcoin (which is already a legal payment method in Japan).

The Indian Ministry of Finance subsequently responded to Somaiya’s views, which ultimately led to the Indian media erroneously reporting that the government intended to define Bitcoin as illegal.

An Indian media outlet revealed that the parliament has set up an "interdepartmental" committee to study the legal status of Bitcoin. It is reported that the committee will announce its preliminary research results on April 20.

However, Somaiya is still dissatisfied with the result, and he once again expressed his "dissatisfaction" with Bitcoin in the parliamentary meeting on Wednesday. In each meeting, there is a "critical moment" session, in which parliament members can raise some important issues.

Somaiya pointed out that Bitcoin is being used “without restraint” in India “in the name of blockchain technology.” He said Bitcoin’s “illegality” lies in its role as a parallel currency. He then called on the government to immediately ban the use of Bitcoin before establishing regulatory rules for the industry.

Somaiya says:

Bitcoin is already trading at Rs 20 billion (around $300 million a day) and it can be used in underground transactions. Last week, several students were arrested for buying drugs and ecstasy. This is happening in the name of blockchain and cryptocurrency and is spreading unchecked. The government has set up a special committee to address this issue and I suggest that they should declare this parallel currency illegal and formulate rules to manage it as soon as possible.

Currently, the Bitcoin industry in India is still unregulated. Two months ago, the Reserve Bank of India issued a notice stating that the country's Bitcoin companies are not officially authorized or recognized. This notice is not much different from the content issued by the government in December 2013, but it has led to the spontaneous establishment of a self-regulatory organization by the Indian Bitcoin industry. They tried to establish a communication channel with the Indian official department, but have not yet received a response.

The Indian Bitcoin industry has also launched a petition, hoping that the country's legislators will confirm the legal status of Bitcoin as soon as possible. Currently, this petition has received more than 10,000 signatures.