India’s finance ministry on Friday cautioned investors about the risks of trading in cryptocurrencies such as bitcoin, saying digital currency investments are like “Ponzi schemes.”

The ministry, in a statement said cryptocurrencies are not legal tender and have no regulatory permission or protection in the country.

The ministry, however did not announce an outright ban or imposing any curbs.

The ministry added that investors and other participants dealing with such digital currencies are doing so “entirely at their risk and should best avoid participating therein.

“There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes”, with investors risking a sudden and prolonged crash.”

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

The ministry also cautioned that encrypted transactions in cryptocurrency were likely being used for illegal activities such as “terror-funding, smuggling, drug trafficking and other money laundering acts.”

India currently has no regulation for cryptocurrencies, and like other global policymakers, it is seeking to understand how to supervise a market that many feel is a speculative bubble.

Bitcoin, the world’s biggest and best-known cryptocurrency, has gained more than 19-fold this year.

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