NEW DELHI / MUMBAI (Reuters) – India will propose a law banning cryptocurrencies, anyone trading in the country, or even owning such digital assets, a senior government official told Reuters. class.
The bill, one of the world’s strictest policies against cryptocurrencies, would make the possession, issuance, mining, trading and transfer of cryptocurrencies punishable, said the official, who has direct knowledge of the plan.
The measure is in line with a January government agenda calling for a ban on private virtual currencies such as bitcoin, while building a framework for an official digital currency. But recent government remarks have raised investors’ hopes that the authorities can go easier on the booming market.
Instead, the holders of cryptocurrencies will have up to six months to liquidate, after which fines will be levied, the official said, asking not to be named as the content of the bill is not public. .
Officials are confident they can pass the bill, as Prime Minister Narendra Modi’s government has a comfortable majority in parliament.
If the ban becomes law, India would be the first major economy to make the possession of cryptocurrency illegal. Even China, which has banned mining and trade, does not possess punishment.
The Ministry of Finance did not immediately respond to a request for comment.
‘BEIERD’ ABOUT ‘PANIC’
Bitcoin, the world’s largest cryptocurrency, reached a record high of $ 60,000 on Saturday, nearly doubling in value as acceptance of payments increased with the support of such high-profile supporters as the CEO of Tesla Inc. Elon Musk.
In India, despite the government’s threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($ 1.4 billion) in crypto investments, according to industry estimates. No official data is available.
“The money is growing fast every month and you do not want to sit on the sidelines,” said Sumnesh Salodkar, a crypto investor. “Although people are panicking about the possible ban, greed is the choice.”
User registrations and cash inflows at Bitbns with a crypto exchange are 30 times higher than a year ago, said Gaurav Dahake, its CEO. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite concerns about the ban.
ZebPay “did just as much volume per day in February 2021 as in February 2020,” said Vikram Rangala, the stock market’s chief marketing officer.
Key Indian officials have called cryptocurrency a ‘Ponzi scheme’, but Finance Minister Nirmala Sitharaman has eased some investor concerns this month.
“I can only give you the clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” she told CNBC-TV18. “A very calibrated position will be taken.”
However, the senior official told Reuters that the plan is to ban private cryptocurrencies while promoting blockchain – a secure database technology that is the backbone of virtual currencies, but also a system that experts say is revolutionizing international transactions. can make.
“We do not have a problem with technology. There is no harm in using the technology, ” the official said, adding that the government’s moves would be ‘calibrated’ in the scope of the fines on those who did not liquidate crypto-assets.
PRISON CONDITIONS?
A government panel in 2019 recommended imprisonment of up to ten years for people who exploit, generate, hold, sell, transfer, sell, issue or trade cryptocurrencies.
The official declined to say whether the new bill contained jail time as well as fines, or to give further details, but said the discussions were in their final stages.
In March 2020, the Supreme Court of India rejected a 2018 order from the central bank banning banks from trading in cryptocurrencies, prompting investors to enter the market. The court ordered the government to take a stand and draft a law on the matter.
The Reserve Bank of India reiterated its concern last month, saying it was the risks to financial stability of cryptocurrencies. At the same time, the central bank is working on launching its own digital currency, a move that will also encourage the government’s bill, the official said.
Despite the market euphoria, investors are aware that the boom could be in jeopardy.
“If the ban is official, we must comply,” Naimish Sanghvi, who has been betting on digital currencies for the past year, told Reuters, referring to existing concerns about a possible ban. “Until then, I’d rather work with the market than panic and sell.”
Reporting by Aftab Ahmed and Nupur Anand; Edited by Euan Rocha and William Mallard