Indian Panel suggested a law banning cryptocurrencies and fining anyone trading in the country or even holding such digital assets, according to the senior government official.
The bill, one of the world’s strictest policies against cryptocurrencies, plans to criminalise possession, issuance, mining, trading and transferring crypto-assets. The measure is in line with a January government agenda that called for banning private virtual currencies while building a framework for an official digital currency. The holders of cryptocurrencies will have up to six months to liquidate, after which penalties will be levied.
Even China, which has banned mining and trading, does not penalise possession. Therefore, if the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal.
Bitcoin, the world’s biggest cryptocurrency, hit a record high of $60,000 on Saturday, nearly doubling in value this year. In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold $1.4 billion in crypto-investments, however, no official data is available. One crypto-investor noted:
“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines. Even though people are panicking due to the potential ban, greed is driving these choices.”
Top Indian officials have called cryptocurrency a “Ponzi scheme”, but Finance Minister Nirmala Sitharaman this month eased some investor concerns.
“I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency. There will be a very calibrated position taken.”
The plan is to ban private crypto-assets while promoting blockchain. The official added:
“We don’t have a problem with technology. There’s no harm in harnessing the technology.”
According to the government panel in 2019 there are jail terms of up to 10 years on people who mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies. The official said the discussions were in their final stages.
In March 2020, India’s Supreme Court struck down a 2018 order by the central bank forbidding banks from dealing in cryptocurrencies, prompting investors to pile into the market. The Reserve Bank of India voiced its concern again last month, citing what it said were risks to financial stability from cryptocurrencies. At the same time, the central bank has been working on launching its own digital currency.
Despite the market euphoria, investors are aware that the boom could be in danger.