Bitcoin gang gets 67 new e-currencies, value grows to $13-bn

Dec 29 2013, 20:04 IST
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SummaryAs regulatory glare intensifies on bitcoins due to possible money laundering, cyber security and other risks, over five dozen other virtual currencies have come under the scanner and include a desi version by name of 'laxmicoin'.

linked to the complexities involved in the way bitcoin is 'mined'. The newer avataars are comparatively much easier to create, word-of-mouth publicity and a rush of speculators has ensured they are catching up much faster, traders said.

While absence of information of counterparties while trading could subject users to breaches of Anti-Money laundering laws, account opening also exposes them to risk of identity theft.

Most platforms require users to upload images of government photo IDs (passport, driver's licence etc), proof of address documents (utility bill, vehicle registration etc) as well as online banking account details.

While the US has declared that all prevailing money laundering laws would apply to bitcoins, China has asked its banks and other financial institutions not to deal in bitcoins and the public has been asked to do so at their own risk.

Earlier this month, the European Banking Authority said thefts from digital wallets have exceeded USD 1 million in some cases and traders are not protected against losses.

On Christmas day, hackers digitally robbed 21 million Dogecoins that was reportedly created earlier this month to poke fun at Bitcoin.

While RBI is yet to come out with a clear regulatory framework for bitcoins, within days of its advisory entities such as buysellbitco.in, INRBTC and unocoin suspended operations, temporarily or indefinitely, while websites of a few others have gone down.

A team of Enforcement Directorate (ED) officials last week raided two offices in Ahmedabad for illegally trading of bitcoins through their websites.

"With the shutdown of these India-based exchanges, consumers will now seek other exchanges in order to purchase Bitcoin, driving business elsewhere. To be fair, RBI's actions are expected. Bitcoin is a new technology and its nature is very risky because its still in its infancy," said Jinyoung Lee Englund, Director of Public Affairs, Bitcoin Foundation.

Soon after global monetary authorities issued warnings or advisories, values of virtual currencies slumped and have become very volatile with daily swings of 5-20 per cent. Bitcoin trades at USD 740, down 25 per cent from its peak.

"The message of central banks is one of caution, reminding consumers that Bitcoin is not government sanctioned or insured and that any involvement would incur personal financial risk. Infrastructure needs to be built and the

foundation is hard at work educating regulators, lawmakers,

and the public...," Lee Englund said.

A virtual currency is a form of unregulated digital money, not issued or guaranteed by a central bank, which can act as a means

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