NEW DELHI: Intelligence agencies have warned that virtual currencies such as Bitcoin may be used to fund illegal activities and move funds through hawala transactions and the government will look into the issue with the Reserve Bank of India (RBI) to ensure such new payment methods are not misused."At present we have no mechanism to deal with such mediums. The expertise from RBI will be used to come with specific measures to tackle such issues," said a government official aware of the concerns raised by the intelligence establishment.Intelligence agencies have also apprised the government that in some countries virtual currency platforms such as Silk Road and Liberty Reserve were tried as unregistered money transmitters."Specific inputs have been received that in some cases these virtual currencies were used for hawala transactions," said another official, who did not wish to be identified. One bitcoin is at present equal to around $640."As of now it is not illegal to buy or sell Bitcoins or any other currency because they are on peer to peer exchange platforms. We are not intending to stop it but ensure checks and balances in the system so that they are not misused," he added.In 2013, RBI had cautioned users, holders and traders of virtual currencies (VCs) including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to."The creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. "No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities," it had said, adding it is examining the issue of holding and trading virtual currencies under existing regulatory laws.Last month, a Bengaluru-based Bitcoin startup, Unocoin , raised $1.5 million in a funding round. "It is more difficult to open an account with us than with any bank," said Harish BV, co-founder of Unocoin, allaying any fears of misuse."We have around 300-400 transactions per day but most investors are for taking advantage of the currency fluctuation," he said, adding that already some small stores in India have started accepting Bitcoins.There are around four firms in India which trade in bitcoins. Globally, there has been concern over illegal transactions using digital currencies.