Bitcoin Is An Investment Bubble, Says India’s Ministry of Financebr>
A somewhat hysterical note from India’s Ministry of Finance has warned investors to become aware of the risks involved when engaging in the cryptocurrency space.
The warning came after the South Korean government said that it will impose tougher measures to crack down on cryptocurrency trading in the country.
The regulator believes the recent price surge of cryptocurrencies such as bitcoin is being driven only by speculation and underscored the risk of an investment bubble. The ministry said that cryptocurrencies don’t have any intrinsic value and are not backed by any kind of assets and added that they are not legal tender.
The ministry added that there is a real and heightened risk of an investment bubble of the type seen in Ponzi schemes, which can result in a sudden and prolonged crash, with retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.
Cryptocurrencies “are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack etc. which may also result in permanent loss of money,” the warning states. “As transactions of (cryptocurrencies) are encrypted, they are also likely being used to carry out illegal/subversive activities, such as, terror-funding, smuggling, drug trafficking and other money-laundering acts.”
Earlier this month, the Income Tax Department of India said they will issue notices to high net-worth individuals (HNI) across the country who invested in bitcoin after surveying nine major cryptocurrency exchanges.
According to the Tax Department, the surveys revealed that out of the estimated 20 lakh (one hundred thousand) entities registered on the cryptocurrency exchanges, about 4 to 5 lakh were “operational” and indulging in transactions and investments. Those individuals and entities are now being probed under tax evasion charges.