Cryptocurrency demand soars after Tesla’s $1.5B investment in Bitcoin; govt warns virtual currency is like ponzi schemes

Elon Musk’s Tesla invested $1.5 billion in bitcoin while the cryptocurrency hit an all-time-high after the news. Earlier, in January this year, Bitcoin rallied above $30000 for first time. The Finance Ministry in its statement said that VCs are not backed by Government fiat.

New Delhi: Ever since the news broke that Tech billionaire Elon Musk's electric vehicle company Tesla has invested $1.5 billion in the Bitcoin cryptocurrency, there has been a sharp increase in recent times in cryptocurrency globally and in India.

Nischal Shetty, founder of Mumbai-based WazirX, a Bitcoin and cryptocurrency exchange and platform tweeted that the exchange has been getting very good response following Tesla's bitcoin investment.

INR deposit credit is delayed on WazirX.

We’re getting a huge amount of deposit requests every minute. Please have patience, your deposit will be credited with some delays. — Nischal (WazirX) (@NischalShetty) February 8, 2021

Elon Musk’s Tesla invested $1.5 billion in bitcoin while the cryptocurrency hit an all-time-high after the news. Earlier, in January this year, Bitcoin rallied above $30000 for first time.

Rahul Pagidipati, CEO, ZebPay, said, “This is a surprise that is also not a surprise at all. Elon Musk has been talking about bitcoin for a long time. The number of users on ZebPay did more than double right after the news. It's a sign to other companies that bitcoin is a solid reserve asset for any balance sheet. We hope central banks will join in and that this news helps nudge the government to buy, not ban bitcoin and let every Indian do the same. Now if tomorrow Tesla also buys a billion dollars of dogecoin, that will be a surprise.”

Meanwhile, the Ministry of Finance has issued the following statement today on Virtual ‘Currencies’ stating that they are like Ponzi Schemes.

The Finance Ministry in its statement said that VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, Virtual ‘Currencies’ (VCs) are neither currencies nor coins. The Government or Reserve Bank of India has not authorised any VCs as a medium of exchange. Further, the Government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any VC. Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs.

"...The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices. 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...," a finance ministry statement said.