"Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes", the ministry said in a statement Friday.
Recently, the government of India termed Bitcoin as a Ponzi scheme and tried to secure the interests of its investors by stating that the currency lacks firm foundation and may be subject to vast fickleness in the future. The indulgence of a huge cluster of potential investors into virtual currency is scary because there are no solid shreds of evidence that blockchain system would survive the legal regulations that European Union is planning to devise and implement.
As defined earlier, a Ponzi Scheme is a fraud, a cheat; and if we go by Govt.'s definition, then all crypto-currencies, including $300 billion worth Bitcoins, is a big scam. Globally, the finance ministries all over the world have labeled Bitcoin and other virtual currencies as bogus due to their no intrinsic value. "The price of VCs is therefore entirely a matter of mere speculation resulting in a spurt and volatility in their prices", the finance ministry said. "As transactions of [virtual currencies] 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". These are also not legal tender.
In a statement, India's finance ministry stated that cryptocurrency do not have any legal tender, regulatory permission, or protection in the country. "Hence, VCs are not currencies".
Further, unlike traditional fiat currencies, cryptocurrencies have no risk of hyperinflation because there is only a finite number of coins available.More news: Winston Reid benched as West Ham draw with Bournemouth
India now has no regulation for cryptocurrencies, and like other global policymakers, it is seeking to understand how to supervise a market that many feel is a speculative bubble. The value of bitcoin has jumped more than 1,700 per cent in 2017, peaking at $20,000 a unit.
"The investors and other participants, therefore, deal with these VCs entirely at their risk and should best avoid participating therein", it added.
On Dec. 21, India's capital market regulator said it was in talks with the government and central bank on how to regulate cryptocurrencies.
Amid repeated calls for caution, the price of Bitcoin plummeted to below USD11,000 on December 22, just days after futures trading in the cryptocurrency began in Chicago exchanges.