Noose on cryptocurrency exchanges tightens as RoC stops registration

LocalBitcoins | This peer-to-peer exchange allows people from different countries to exchange their local currencies to bitcoins. Users post advertisements on the exchange stating their exchange rate and preferred payment method for buying or selling bitcoins. By replying to these advertisements, a trade is opened and escrow protection is automatically activated. Escrow protects both buyer and seller, by keeping the bitcoins safe until the payment is done and the seller releases bitcoins to the buyer. Bitcoins are placed in LocalBitcoins web wallet from where one can pay for their bitcoin purchases directly. However, investors need to be aware of scams as they are dealing directly with other people unlike other stock-like exchanges or centralized bitcoin trading sites.

In a move that makes registration of virtual currency exchanges a stringent affair, the Registrar of Companies (RoC) has stopped registering cryptocurrency exchanges under the Companies Act, 2013, according to a report by Business Standard.

The report suggests that the RoC, which works under the Ministry of Corporate Affairs, has in certain cases, asked for an undertaking from software development or information technology companies that it will not deal with cryptocurrencies.

"I tried to register my company in December, but the RoC didn't accept my request. The company's name had the term 'bitcoin' and the RoC said it wouldn't support it," an executive with an upcoming cryptocurrency exchange told the newspaper.

Cryptocurrency exchanges are platforms for buying and selling of virtual currencies such as Bitcoin. Around USD 100 billion worth of transactions are carried out on such exchanges on an average every month.

Earlier, the government had issued a warning against investing in cryptocurrency. The Reserve Bank of India (RBI) had issued a similar warning earlier advising Indian investors to stay away from the rising digital currency craze.

Investment experts had said that the RBI and government’s decision to warn investors could be indication of stricter policy and regulatory moves that could catch cryptocurrency investors on the wrong foot.