Bitcoin transactions are illegal and risky, Finance Minister Arun Jaitely tells Parliament

"Cryptocurrencies like Bitcoin are not legally recognised in India as they are not a legal tender," Finance Minister Arun Jaitley said in Rajya Sabha on Tuesday, clarifying that there is no consumer protection for those using Bitcoins as transactions are prone to hacking.

He told the House that since 2013, both the Reserve Bank of India and the Centre have consistently maintained that it's not a lawful legal tender.

He was responding to a question from DMK leader Kanimozhi whether there is any consumer protection available to the people who are already using cryptocurrencies.

"Having preliminarily examined this matter, whatever cautions are to be given, both, the Reserve Bank of India and the government, have been giving them from time-to-time to the people that those who deal with it deal with it at their own risk and peril," he added.

Jaitley informed the House that there are 785 virtual currencies operating all over the world and 11 such online exchanges have been identified in India.

"One of the features of crypto currencies has been that there is a lack of dependence on the state and that this function with a certain amount of anonymity. It functions within the virtual community which is created, and enjoys the trust of that virtual community itself. It operates through blogs and operates through WhatsApp groups etc," Jaitley added.

He informed that expert groups are looking into all aspects related to cryptocurrencies to understand how other countries are dealing with it.

A committee under the chairmanship of secretary of Department of Economic Aaffairs is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken.

"While a repeated message was being given that such currencies were not legal tender, more detailed steps will be taken once the report of the committee is submitted," the Finance Minister said.

Independent member Amar Singh wanted to know what action was being taken in regard to the names which have figured in the Panama papers and Paradise papers, even as trading in bitcoins was also going on.