NEW DELHI: India warned on Friday against investing in cryptocurrencies including bitcoin, likening them to “Ponzi schemes”, as it became the latest country to urge caution.
Despite a boom in trade that has seen prices soar, cryptocurrencies “don’t have intrinsic value and are not backed by any kind of assets,” the Indian finance ministry said in a statement.
“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,” it said.
Bitcoin prices plunged by almost 40 per cent from its record high of $19,500 this month as investors cashed out following the wildly volatile currency’s stratospheric rise.
Analysts and governments have repeatedly warned about a bubble that could burst at any moment as investors, many inexperienced, piled into the currency.
India’s government said consumers needed to be “extremely cautious as to avoid getting trapped in such Ponzi schemes”.
Its warning came a day after South Korea, a hotbed for cryptocurrency trading, said it would ban anonymous trading of virtual currencies.
Published in Dawn, December 30th, 2017