NEW DELHI/MUMBAI (INDIA) – India will put forth a law, proposing a ban of cryptocurrencies, fining anyone trading in the country or even having such digital assets, a senior government official told, which could be a potential blow to millions of investors banking on the red-hot asset class.
The bill, which is one of the world’s stringent moves against cryptocurrencies, would penalise possession, issuance, mining, trading and transferring crypto-assets, said the official, who has direct knowledge of the plan.
The measure falls in line with a January government agenda that called for banning private virtual currencies such as bitcoin, It is also aiming to build a framework for an official digital currency.
Instead, the bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official, who asked not to be named as the contents of the bill are not public.
Officials are aiming to get the bill enacted into law as Prime Minister Narendra Modi’s government will have a comfortable majority in parliament.
If the ban materialises into a law, India would be the first major economy to make it illegal for holding cryptocurrency. Even China, which has banned mining and trading, has not made its possession subject to punishment.
Bitcoin, the world’s biggest cryptocurrency, hit a record high $60,000 on Saturday.
Despite government warnings of a ban, transaction volumes are spiralling and 8 million investors now have 100 billion rupees ($1.4 billion), as part of crypto-investments, according to industry estimates.
“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines,” said Sumnesh Salodkar, a crypto-investor. “Even though people are panicking due to the potential ban, greed is driving these choices.”
User registrations and money inflows at local crypto-exchange Bitbns have climbed up 30-fold from a year ago, said Gaurav Dahake, its chief executive. Unocoin, one of India’s oldest exchanges, has had an addition of 20,000 users in January and February, in spite of worries of a ban.
Vikram Rangala, the exchange’s chief marketing officer, said, ZebPay “did as much volume per day in February 2021 as we did in all of February 2020.”
Top Indian officials have called cryptocurrency a “Ponzi scheme”, Finance Minister Nirmala Sitharaman this month took off a few of 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,” she told CNBC-TV18. “There will be a very calibrated position taken.”
The senior official told, however, that the plan is to ban private crypto-assets while promoting blockchain, which is a secure database technology. It is not just the foundation for virtual currencies but also a system, which according to experts say could completely revive international transactions.
The official, adding the government’s moves would be “calibrated”, with regard to the extent of penalties imposed on those who have not yet liquidated crypto-assets within the law’s grace period. “We don’t have a problem with technology. There’s no harm in harnessing the technology.”
A government panel in 2019 recommended imprisonment of up to 10 years on people who mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies.
The official, however, refused to say whether the new bill includes jail terms as well as fines, or offer further details, however, said the discussions were in their final stages.
“If the ban is official we have to comply,” Naimish Sanghvi, who started betting on digital currencies last year, told, referring to existing concerns about a potential ban. “Until then, I’d rather stack up and run with the market than panic and sell.”