Cryptocurrency Warnings: Indian Authorities Say Digital Currencies are Like Ponzi Schemes
Several countries and central banks have issued various warnings to investors related to the cryptocurrency market and its risks. The latest such warning came from the government of India, which actually claimed that cryptocurrencies are like Ponzi schemes.
The Finance Ministry of India issued a public warning related to the cryptocurrency market. The warning was addressed to all the individuals who plan on investing in digital currencies such as bitcoin.
According to the Ministry of Finance, digital currencies are like Ponzi schemes and are associated with high risks. Allegedly, cryptocurrencies, including Bitcoin, lack intrinsic value and are not backed by assets.
India's Finance Ministry: Cryptocurrencies' price is backed by speculation
The same statement from India's Ministry of Finance said that the price of digital currencies is only backed and enhanced by speculation, which of course means that the risks are too high and could lead to important losses for investors. The statement indicated that:
“There is a real and heightened risk of investment bubble of the type seen in ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.”
The same statement indicated that cryptocurrencies are likely to be used for criminal activities, such as money laundering, or funding terrorism, drug trafficking and smuggling. According to the warning, investors should also keep under consideration the fact that their money are at risk of theft or loss because there is no consumer protection.
In conclusion, the Ministry of Finance said that the best thing investors could do is to stay away from the cryptocurrency market.
This is not the first such warning that came from India this year. In fact, the central bank of the country issued two other separate warnings on cryptocurrency investments in February and December.
Some indications from the country came on the importance of regulating the cryptocurrency market, with the Supreme Court calling on the government to develop such regulations. Nothing has been decided for the moment on this area.
