India will propose a law banning cryptocurrencies, fining anyone who operates in the country or even has digital assets, a senior government official told Reuters in a possible blow to millions of investors piling into the hot asset class.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalize the possession, issuance, mining, trading and transfer of crypto assets, said the official, who has direct knowledge of the plan.
The move is in line with a January government agenda calling for a ban on private virtual currencies like bitcoin while building a framework for an official digital currency. But recent comments from the government had raised investors’ hopes that the authorities could act more calmly in the booming market.
Instead, the bill would give cryptocurrency holders up to six months to settle, after which penalties will be imposed, said the official, who asked not to be identified as the bill’s content is not public.
Officials are confident that the bill will become law, 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 outlaw the holding of cryptocurrencies. Even China, which has banned mining and trade, does not criminalize possession.
The Finance Ministry did not immediately respond to an email seeking comment.
‘GREED’ ABOUT ‘PANIC’
Bitcoin, the world’s largest cryptocurrency, hit a record $ 60,000 on Saturday, nearly doubling in value this year as its acceptance of payments has risen with the support of high-profile backers such as Tesla Inc. CEO Elon. Musk.
In India, despite government threats of a ban, transaction volumes are increasing and 8 million investors now have 100 billion rupees ($ 1.4 billion) in crypto investments, according to industry estimates. No official data is available.
“Money is multiplying rapidly every month and you don’t want to be sitting on the guidelines,” said Sumnesh Salodkar, a crypto investor. “Although people are panicking over the possible ban, greed is driving these options.”
User registrations and money inflows on the local cryptocurrency exchange Bitbns have increased 30-fold from 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 of a ban.
ZebPay “made as much volume per day in February 2021 as we did in all of February 2020,” said Vikram Rangala, the exchange’s chief marketing officer.
Top Indian officials have called the cryptocurrency a “Ponzi scheme,” but Finance Minister Nirmala Sitharaman this month eased some investor concerns.
“I can only give you this hint that we are not closing our minds, we are looking for ways that experiments can occur in the digital world and cryptocurrencies,” he told CNBC-TV18. “A very calibrated position will be taken.”
However, the senior official told Reuters that the plan is to ban private crypto assets while promoting blockchain, a secure database technology that is the backbone of virtual currencies, but also a system that experts say could revolutionize international transactions.
“We have no problem with technology. There is no harm in leveraging the technology, ”the official said, adding that the government’s measures would be“ calibrated ”in the scope of sanctions for those who did not liquidate crypto assets within the law’s grace period.
TERMS OF JAIL?
A government panel in 2019 recommended jail time of up to 10 years for people who mine, generate, hold, sell, transfer, dispose of, issue, or trade cryptocurrencies.
The official declined to say whether the new bill includes jail time and fines, or to offer more details, but said the discussions are in their final stages.
In March 2020, the Supreme Court of India struck down a 2018 order from the central bank that prohibited banks from trading cryptocurrencies, prompting investors to enter the market. The court ordered the government to take a position and draft a law on the matter.
The Reserve Bank of India again expressed concern last month, citing what it said were risks to the financial stability of cryptocurrencies. At the same time, the central bank has been working on launching its own digital currency, a step that will also spur the government bill, the official said.
Despite the market’s euphoria, investors are aware that the boom could be in jeopardy.
“If the ban is official, we have to comply,” Naimish Sanghvi, who started betting on digital currencies last year, told Reuters, referring to existing concerns about a possible ban. “Until then, I’d rather stack and run the market than panic and sell.”