Risk Disclaimer

RISKS

Bitcoin is a new technology that often works differently to your prior experience. It therefore entails various risks that you should understand. We have highlighted some of these risks below.

Bitcoin transactions are irreversible. If you send Bitcoins to an incorrect address, or send the wrong amount of Bitcoins, you cannot get them back. We cannot be held liable for executing a transaction if the instruction relates to an incorrect Bitcoin address.

Before buying or selling Bitcoin, educate yourself about Bitcoin. Buying and selling Bitcoin entails risks and could result in a complete loss of your funds. Please ensure that you fully understand the risks involved and do not invest money that you cannot afford to lose.

Bitcoin is not backed by any entity. Neither we nor anyone else has an obligation to buy back your Bitcoins in the future.

Additionally it is very important to note the following risks:

  • Bitcoin is not legal tender and it is not backed by the government. Accounts and value balances are not subject to any Government backed deposit insurance or any other Government protections;
  • Legislative and regulatory changes or actions at the state or international level may adversely affect the use, transfer, exchange, and value of Bitcoin;
  • Transactions in Bitcoin are generally irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;
  • Bitcoin transactions shall be deemed to be made when recorded on a “block chain” ledger, which is not necessarily the date or time that you initiate the transaction;
  • Bitcoin is derived from the continued willingness of market participants to exchange fiat currency for Bitcoin, which may result in the potential for permanent and total loss of value of Bitcoin, should the market for Bitcoin disappear;
  • There is no assurance that a person who accepts a Bitcoin as payment today will continue to do so in the future;
  • The volatility and unpredictability of the price of Bitcoin relative to fiat currency may result in significant loss or tax liability over a short period of time;
  • The nature of Bitcoin may lead to an increased risk of fraud or cyber attack;
  • The nature of Bitcoin means that any technological difficulties experienced by a service provider may prevent the access or use of your Bitcoin.
  • Bitcoins being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorized central registry or agency, the loss of the e-wallet could result in the permanent loss of the Bitcoins held in them.
  • Payments by VCs, such as Bitcoins, take place on a peer-to-peer basis without an authorized central agency which regulates such payments. As such, there is no established framework for recourse to customer problems / disputes / charge backs etc.
  • There is no underlying or backing of any asset for Bitcoins. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value.
  • It is reported that VCs, such as Bitcoins, are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders on such platforms are exposed to legal as well as financial risks.
  • There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.

The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of Bitcoins under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations. (RBI Press Release 2013-2014/1261)

 

The Reserve Bank of India advises that it has not given any license / authorization to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk. (RBI Press Release 2016-2017/2054)