Rumours of a proposed bill in India that bans cryptocurrency may have been confirmed after Indian blockchain lawyer Varun Sethi posted an alleged first draft of the proposed bill.
The “Banning of Cryptocurrency and Regulation of Official Digital Currencies” bill, which proposes to ban or heavily restrict all cryptocurrency-related activity in India, was leaked this week.
A report from the Economic Times in April 2019 mentioned that the bill had already been examined by a committee of representatives from the Department of Economic Affairs, Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs (CBIC) and other regulatory bodies.
The committee held the view that there has already been an unnecessary delay in taking action against cryptocurrency. This bill if passed will make all crypto related activities including mining and trading illegal in the country, with offenders risking jail time of up to 10 years. An excerpt from the 18-page document reads
No person shall mine, generate, hold sell deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India.
With already strict crypto regulations in place, this is not the first time the government will be accused of planning to completely do away with digital assets in the country.
In what may be the only positive thing the bill hopes to achieve, the draft also hints at the government introducing a stable coin of its own. The draft also does not prohibit the use of distributed ledger technologies and blockchain technology for educational purposes as long as no form of cryptocurrency is used as payment for such work done. It also permits the use of blockchain technology to facilitate other forms of services as long as cryptocurrency is not used as payment.
It will be recalled that the Reserve Bank of India (RBI) last year announced that it will look into issuing its own Central Bank Digital Currency (CBDC). Following an inquiry filed by Sethi querying the bank’s involvement with the alleged bill, CCN reported in June that the RBI denied any knowledge of the matter.
Last week, CCN reported that Facebook suspended its planned launched of its Calibra digital wallet in India based on fears that the Indian regulatory stance on cryptocurrency was still hostile. Despite its widespread popularity in one of the world’s tech-savviest countries, cryptocurrency is still something of an endangered species in India, with the national government repeatedly indicating that it has no intention whatsoever of working out a framework to allow for regulated cryptocurrency trading in the country.
Some speculate that this is because of India’s unique crypto experience which has been dotted with several scams and ponzi schemes cumulatively worth billions of dollars. Some also speculate that the regulatory antipathy is a legacy of India’s recent demonetization of 500 and 1,000 rupee notes, which was hampered to an extent by some Indians converting their fiat holdings to bitcoin in order to avoid disclosing their true financial status to the government via the financial system.
Regardless of the Indian government’s intentions, the draft bill remains to all intents and purposes a rumor until it is officially read out and debated in parliament. Local crypto industry personalities are confident the bill will not be debated this year. Coupled with the fact that it typically takes a long time for bills to make their way through the world’s largest democracy, any proposed implementation could still be years away.
Others also believe that the Indian government’s regulatory stance may have shifted in support of crypto following Prime Minister Narendra Modi’s publicly stated position on crypto at the recently concluded G20 summit in Osaka, Japan.
Last modified: January 11, 2020 12:57 AM UTC