The Securities and Exchange Board of India (SEBI) will come down heavily on illicit 'initial coin offers' seeking public investments with the promise of high returns from Bitcoins and other virtual currencies, amid a mushrooming of such schemes in the absence of any regulatory regime, reports PTI.

The cryptocurrency market, claiming to be the next big thing, has attracted a lot of gullible investors seeking to reap profits off the digital currency trend. Being offered on some exchanges as the underlying product, these 'exchanges' or the products have not been approved by the RBI or any other agency in India.

'Initial Coin offerings' and secondary trading in Bitcoins have become fraudulent schemes that are taking advantage of the fact that there has been no regulatory body governing trade in cryptocurrencies in India. The RBI has been publically expressing its disapproval of such currencies, while tax authorities conducting investigations at various exchanges have collected information on lakhs of entities and HNIs who have engaged in Bitcoin trading.

In spite of the this, SEBI is not keen on taking the role of a regulator in cryptocurrency trading. The plight of regulators and government being that taxing these currencies would mean giving them a legal status which involves high risks of money laundering or terrorist financing through such activities.

However, there is a kind of unanimity emerging about subjecting such trading to laws against black money, money laundering and frauds so that the interest of general public remains safeguarded, a senior official said, while adding that any final decision would be taken at highest level, and a multi-regulatory panel may be assigned that job, reports PTI.

The risk of the Bitcoin trading has surged with the significant increase in its valuation in recent times. With increasing false schemes of 'ICOs' to fund new cryptocurrencies, a large number of investors including HNIs are lured into the claims of huge returns.