NEW DELHI / MUMBAI (Reuters) – India will propose a law banning cryptocurrencies, fining anyone who trades in the country or even owns these digital assets, a senior government official told Reuters in a possible coup in millions of investors crowded into the strong working class.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalize the possession, issuance, mining, trade and transfer of cryptocurrencies, said the official, who has direct knowledge of the plan.
The move fits into the January government agenda calling for a ban on private virtual currencies like bitcoin while building a framework for an official digital currency. But recent government comments had raised investors ’hopes that the authorities could more easily go into the booming market.
Instead, the bill would give cryptocurrency holders up to six months to settle, after which sanctions will be levied, the official said, asking that they not be named, as the content of the bill is not public.
Officials are confident the bill will be enacted, 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 cryptocurrencies illegal. Even China, which has banned mining and trade, does not penalize possession.
The Ministry of Finance did not immediately respond to an email asking for comments.
“FAULT” ON “PANIC”
Bitcoin, the world’s largest cryptocurrency, hit a record $ 60,000 on Saturday, nearly doubling in value this year as its payment acceptance has increased with the support of such prominent sponsors as Tesla Inc. CEO, Elon Musk.
In India, despite government threats to ban, transaction volumes are increasing and 8 million investors now have Rs 100 crore ($ 1.4 billion) in cryptocurrencies, according to industry estimates. No official data available.
“Money multiplies quickly every month and you don’t want to be on the sidelines,” said Sumnesh Salodkar, an investor in cryptocurrencies. “While people are panicking because of the possible ban, greed is driving these decisions.”
User registrations and money entries on local cryptocurrency Bitbns have multiplied by 30 compared to a year ago, said Gaurav Dahake, its executive. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite concerns of a ban.
ZebPay “made as much daily amount in February 2021 as we did throughout February 2020,” said Vikram Rangala, head of marketing at the exchange.
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 clue that we are not closing our minds, we are looking for ways in which experiments can take place in the digital world and in cryptocurrency,” he told CNBC-TV18. “There will be a very calibrated position.”
The senior official told Reuters, however, that the plan is to ban private cryptographic assets while promoting the blockchain, a secure database technology that is the backbone of virtual currencies, but also a system that according to experts it could revolutionize international transactions.
“We have no problem with technology. There is no harm in harnessing the technology, ”the official said, adding that government moves would be“ calibrated ”in the extent of sanctions to those who did not liquidate cryptographic assets during the grace period of the law. .
TERMS OF PRESSURE?
In 2019, a government group recommended up to ten years in prison for people who extract, generate, maintain, sell, transfer, dispose of, issue or deal in cryptocurrencies.
The official declined to say whether the new bill includes prison sentences as well as fines, or offer more details, but said the discussions were in their final stages.
In March 2020, India’s Supreme Court overturned a 2018 central bank order banning banks from trading 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 and cited 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 boost the government bill, the official said.
Despite the euphoria of the market, investors are aware that the boom could be in jeopardy.
“If the ban is official, we will have to comply with it,” Naimish Sanghvi, who began betting on digital currencies last year, told Reuters, referring to existing concerns about a possible ban. “Until then, I’d rather stack up and run with the market than panic and sell.”
Reports by Aftab Ahmed and Nupur Anand; Edited by Euan Rocha and William Mallard