Financial News

  • 30 December 2013, 8:48

Bitcoin Setback: New Central Bank Warning

India's biggest Bitcoin trading platform has suspended operations after the country's central bank warned of the risks of using virtual money.

Confirmation that had closed its platform came just over a week after the currency's value more than halved followinga similar warning from China's central bank.

That move, on December18, prompted China'sbiggest trading platform to banBitcoin deposits in yuan. said on its website: "We are suspending buy and sell operations until we can outline a clearer framework with which to work," adding that the move was "to protect the interest of our customers".

Bitcoin, which can be stored either virtually or on a user's hard drive and offers a largely anonymous payment system, had begun gaining popularity in India.

The emergence of Bitcoin and other virtual currencies in India has come despite a traditional preference for assets backed by property and other tangible goods.

"There is no underlying or backing of any asset for virtual currencies and as such their value seems to be a matter of speculation," the central bank said in its December 24 advisory.

The "huge volatility in the value of virtual currencies has been noticed", it added.

The central bank stopped short of issuing a ban or any curbs on Bitcoin or other virtual currencies.

However, because the currencies were not authorised by any central bank or monetary authority there was no established recourse for customers in the case of problems, it said.

The People's Bank of China last week ordered financial institutions not to provide Bitcoin-related services and products and cautioned against its potential use in money-laundering.

At the last rate posted by, which was conducting about 12 million rupees worth of Bitcoin transactions monthly, one Bitcoin was selling for 48,039 rupees ($776), local media said.

The dollar worth of a Bitcoinrocketed to a $1,200 peak in early December but fell back sharply when China issued its guidance.

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