One such area that is grossly unregulated pertains to dealings in Bitcoins in India. Although it being too risky to deal in Bitcoins in India without complying with Indian laws yet many people and websites kept on dealing in the same. But the Reserve Bank of India (RBI) and Indian government were slow in reacting to the issue. Meanwhile, Bitcoins frauds and crimes were increasing world over, including in India.
Realising the gravity of the situation, the RBI cautioned users of virtual currencies against various risks. These include legal risks as well. With the present advisory, the websites and individuals dealing in Bitcoins in any manner whatsoever must comply with the techno legal requirements of Indian laws. Otherwise, they may find themselves in big trouble.
Many people and companies were dealing in Bitcoins in India with great disregard to the cyber law due diligence requirements and in active violation of the Internet intermediary liability rules framed under the Information Technology Act, 2000. The money laundering and foreign exchange laws of India were also not analysed before opening such Bitcoins websites.
In the first possible prosecution of individuals/company engaged in dealing in Bitcoins, searches were conducted on Seven Digital Cash LLP which owns a Bitcoin website – www.buysellbitco.in based in Ahmedabad. “We have conducted searches at 2-3 locations of Seven Digital Cash LLP and its website. The company was involved in buying and selling of Bitcoins in India, operating from Ahmedabad,” an ED official confirmed. The website www.buysellbitco.in has stopped operating online soon after the searches.
Although the website has stopped operating after the search, this would not absolve the people behind he website from civil and criminal liabilities for violation of any Indian law. This incidence is also an eye opener for other Bitcoins websites operating in India to fall in line with Indian laws. Otherwise, they may be prosecuted in the near future.