An Indian inter-ministerial committee on cryptocurrency and blockchain technology has finalized a report recommending both the establishment of a digital Rupee and a ban of cryptocurrencies.
The roughly 200-page report spends thousands of words breaking down and praising the potential uses of blockchain technology, specifically in areas like land management.
Ultimately it concludes that while banks and financial institutions should be allowed to utilize digital ledgers, private citizens should be barred from holding or transacting with them. It includes a piece of draft legislation making it a crime to hold, buy, or sell cryptocurrencies.
The proposed legislation makes room for crypto research, but bans most normal activities, including mining and holding cryptocurrency.
In the same legislation, the authors would establish a “Digital Rupee” system which would be the only legal crypto tender in India.
Indians have suspected the government was heading this direction since the country’s central bank prohibited all subordinate from offering services to crypto companies.
Legislators have previously floated the idea of long prison sentences for Bitcoin adopters. Indian authorities have been among the most active in prosecuting crypto crime and fraud cases, playing a critical role in the unraveling of the Bitconnect scam and just today announcing a large seizure in that case.
Established in 2017 when it was impossible to ignore Bitcoin, the committee languished for two years determining how the world treats cryptocurrency. One of the primary and loudest conclusions of the report is that:
“It is essential to note that as of date no country across the world however treats virtual currencies as legal tender.”
However, several countries have changed their views in the intervening years. In many places, using cryptocurrency isn’t viewed differently as using other money. There are even some places, such as the US state of Ohio, where you can make tax payments using cryptocurrency.
India’s “Banning of Cryptocurrency and Regulation of Official Digital Currency Act, 2019” would make it a crime to do virtually anything related to cryptocurrency. If convicted, an offender would face not less than 1 year in prison with possible sentences up to ten years long.
Penalties also include fines, which seem more likely, of up to “three times” the amount a person earned. So if you somehow made $1 million in crypto, the Indian government could come after you for $3 million, and so forth.
Every major financial authority in India, including the Reserve Bank of India and the Securities and Exchange Board of India, had input on the report.
If carried out, the recommendations of the act would make India the first major country to completely ban its citizens from using and holding cryptocurrencies.
The committee is far from the first working group or politician to suggest an all-out ban, but they are perhaps the most influential such group to date.
The proposal comes at a time when governments around the world are reckoning with the potential menace of Facebook’s Libra and possible alternative financial system.