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Bitcoin warning from the Indian Central Bank: a sign of fear?

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On December 5, the Central Bank of India (RBI), the bank Central of the country, warned investors of bitcoin, pointing out that the government has not yet regulated the exchange of bitcoins and cryptocurrency on the local market.

An official statement published by the RBI read:

"Reserve Bank of India (RBI) December 24, 2013, [cautioned] users, holders and traders of virtual currencies (VCs) including Bitcoins regarding the potential economic, financial, operational, legal, customer and the security-related risks associated with the treatment of these VCs.Enough press release dated February 1, 2017, RBI also specified that it has not given any license / authorization to any entity / company to operate such schemes or deal with Bitcoin or any VC. "

Central banks are not satisfied with Bitcoin

At a financial forum held in Shanghai last week, the deputy governor of the People's Bank of China (PBoC), Pan Gongsheng, said that in the long run, the value and the adoption of Bitcoin would drop. "One day, you will see the corpse of Bitcoin floating in front of you", says Gongsheng.

However, contrary to Gongsheng's statement and the RBI's warning, the demand for bitcoin has grown exponentially in recent months. Even after the ban on the exchange of cryptocurrency by the Chinese government, the central bank and the financial authorities, the price of bitcoin rose from $ 5,000 to $ 12,600, peaking at $ 13,000 today, December 6th.

In an interview with Quartz, Codinome's CEO, Vivek Steve Francis, explained that if the RBI's intention was to ban cryptocurrencies and restrict bitcoin, the Indian government would have already done so. But, due to excessive regulation and a outright ban on cryptocurrency trading, the government has been reluctant to impose unnecessarily stringent rules on cryptocurrency and currency exchange. the bitcoin market.

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"If India were to ban virtual currencies, it would have already done so.In the last three years, the RBI's statement has been the same: they are hurting at And people should invest at their peril " says Francis.

It has become increasingly difficult for governments to ban or severely restrict the use of bitcoins because of the exponential growth of the cryptocurrency market, the rapid rise of demand for cryptocurrency and the high probability that traders will migrate to unregulated markets. when imposing a ban on trading cryptocurrency.

A similar trend occurred in China, where traders moved to foreign markets such as Hong Kong with offshore accounts to exchange cryptocurrencies. As such, BTCC, Huobi and OKCoin, formerly three of the largest cryptocurrency exchanges in China, have renamed, Huobi Pro and OKEx, to provide OTC services in Hong Kong.

Sign of fear

As a decentralized currency and peer-to-peer protocol, bitcoin eliminates the need for intermediaries such as banks, and most importantly, separates money and the state. Bitcoin decreases the importance of central banks and calls into question the existence of government-issued currencies, or the fiduciary money system.

Despite the widespread adoption of bitcoin as a robust stock of value and safe haven by consumers, investors, major financial institutions, institutional investors, investment banks and corporations In the long run, central banks probably continue to reaffirm their opposition to bitcoin, since it poses a serious threat to their authority.