Sebi will take strict action against illicit 'initial coin offers', or ICOs, seeking public investments with promise of high returns from Bitcoins and other virtual currencies, amid a mushrooming of such schemes in the absence of any regulatory regime. Modelled on the Initial Public Offers or IPOs for issuance of new shares in the stock market, some entities have begun resorting to ICOs to raise funds from investors, including HNIs and other individuals, who are getting lured into claims of huge returns from bitcoins and other such variants.
However, Sebi is not keen to act as a regulator for such 'trading' -- currently being offered on a number of so-called exchanges despite there being no rules in this regard -- as the underlying product, which is Bitcoin or any such crypto currency, is not an approved product by RBI or any other agency, top officials said.
At the same time, Sebi must protect gullible investors from unlawful and false promises by these exchanges and those claiming to 'mint' crypto currencies. A number of them are suspected to be indulging in fraudulent activities without actually minting any such virtual currencies that require very complex algorithms, the officials noted. A number of 'coin offerings' being made in India are nothing but fraudulent Ponzi or pyramid schemes, including some offering secondary trading in Bitcoins or other established virtual currencies, while many others are plain frauds without any such currency actually being in play, they added.
RBI has disapproved of all such currencies, while tax authorities recently conducted searches at various exchanges and are believed to have collected information on lakhs of entities, including HNIs who could have 'traded' there.
The regulators and government agencies are in a fix as even imposing a tax would amount to giving a legal status to such currencies, for which any consensus remains elusive, given the huge risks, including money laundering and terrorist financing, attached with such activities. However, there is a kind of unanimity emerging about subjecting such trading to laws against black money, money laundering and frauds, so that the interest of general public remains safeguarded, a senior official said, while adding that any final decision would be taken at the highest level and a multi-regulatory panel may be assigned that job.
The RBI has been issuing warnings since 2013, the first time when the surge in bitcoins caught the attention of Indians, but the risks have multiplied manifold now in the wake of a significant spurt in the valuation of many such virtual currencies and a rapid growth in Initial Coin Offerings (ICOs).
http://www.cfo-india.in/article/2017/12/17/sebi-take-strict-action-against-bitcoin-%E2%80%9Cicos%E2%80%9D
Topic: SEBI to take strict action against Bitcoin “ICOs” (Read 121 times)
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