After two years, a much-hyped consortium of bankers and legislators has proposed that the Indian government completely ban public cryptocurrencies (like Bitcoin).
The same draft bill (“Banning of Cryptocurrency and Regulation of Official Digital Currency Act, 2019”) establishes the country’s digital Rupee. A Rupee is like a dollar but you need over 68 of them to get a can of Coke. A dollar is like a Bitcoin but you need over 10,000 of them to get in trouble with most authorities.
The proposed law will turn tens of thousands of CCN readers into criminals at the flick of a pen, so we thought it was a good time to list off the ways they will be breaking the law.
Any regular infraction of the law can result in a prison sentence of up to 10 years and a fine of 300% of the criminal proceeds. Repeat infractions result in longer sentences and larger fines. In cases where they don’t know how much you made, they can take millions of dollars.
The Act prohibits literally every type of basic crypto activity one can name, beginning with “mining” or generating. Regional neighbors mining Bitcoin and other cryptos in China might be happy to learn that the Indian government wants no part of the soon-to-be-criminalized “mining” industry.
“No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use Cryptocurrency in the territory of India.”
As you read, though, it also bans most other types of crypto activity. While the authors did not use the word “receive,” they make it unclear what happens if an Indian does receive cryptocurrency. Since it is illegal to “hold,” possessing cryptocurrency received at random will become a criminal act.
Indian officials are clearly considering the “just say no” approach to cryptocurrency – the same approach that’s resulted in trillions of wasted dollars and millions of incarcerated global citizens over in the drug war.
Currently, it’s possible to receive cryptocurrency without ever creating a wallet in more than one way.
The bare-metal option for this is the physical transfer of a paper wallet. Hacktivists from the savage lands where crypto is embraced or allowed to flourish could turn thousands of Indians into criminals by raining low-value paper wallets in from the sky.
But the bottom line seems to be that even if you grow up, leave India, and make a fortune in crypto elsewhere, you’d best not have any intention of investing (“repatriating“) that crypto back home.
But that’s not all. Imagine you were a law-abiding Indian who didn’t want to suddenly become a criminal.
This is the part that gets interesting. If all of the aforementioned activities are illegal, what are you supposed to do with crypto you’re already holding?
When a government wants to ban anything else, they have a redemption period. When they banned guns in Australia, a “mandatory buyback” program allowed Australians to get some of the value for their weapons.
If the Indian government has no interest in a vibrant crypto industry, where will people exchange their pre-existing crypto?
Back in January, CCN spoke to XDAT’s Prashanth Swaminathan. XDAT is a bitcoin/crypto exchange that wants to operate in India but had to establish itself in Malta, pending regulations.
“At this moment, they are working it out. And they are expected to come out with a regulatory framework for moving this forward. The three concerns they have in my mind are one, tax. Two, money laundering. And three, protecting investors.”
At the time, Swaminathan seemed confident that a pro-crypto framework would come from the inter-ministerial working group who drafted this law.
But when you have a hammer, everything looks like a nail. The committee could have chosen to focus on preventing money laundering and enhancing investor protections. But why do all that when you can just fill the jails and the coffers of the Consolidated Fund of India?
“Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues Cryptocurrency or any combination thereof with an intent to use it for any of the purposes mentioned in, or directly or indirectly uses Cryptocurrency for any of the activities […] shall be punishable with fine or with imprisonment which shall not be less than one year but which may extend up to ten years, or both.”
The criminally rich Indian Bitcoiner should also carefully maintain his records, for if the government can’t prove how much you made from your illegal technology, they’re authorized to fine you over $3 million USD (25 Crore). And that’s just for the basic offenses.
Don’t let it be your second or third strike, in which case your minimum prison sentence is 5 years and your maximum penalties are significantly enhanced.
However, if you have good records and you can prove how much you made or lost, your fines will be based on that – a mere 300% of your proceeds. And where do they go?
The Consolidated Fund of India, of course, the country’s most important fund – which could set a new precedent for sticky-fingered central bankers the world over.
(Can’t make your economy work? Make crypto illegal and steal all that nerd money. You’ll have plenty more time to mismanage the fiduciary affairs of state. )
The group of insiders who drafted “Banning of Cryptocurrency and Regulation of Official Digital Currency Act, 2019” bring to life the concept of “blockchain, not Bitcoin,” in a way that’s never been dreamed of before.
While just one of its earliest passages bans most crypto behavior, the other two protect and promote certain kinds – namely, the government’s right to establish a cryptocurrency and the ability of Indians to conduct “blockchain research.”
Blockchain research protections will be important for firms like Eleven01, who are already actively engaged in various blockchain technology projects, even partnering with a regional government.
On the plus side, the law does direct judges to consider things like “intended profit” and “actual profit” when sentencing an offender. They must also consider whether the offender had any effect on the economy. Within reason, this could mean that the law isn’t really targeted at Indian civilians at all, but rather businesses and fraudsters.
Onerously, however, the act outlines several instances where someone might get “immunity” from prosecution. If you already lack faith in government, you’re likely considering the types of people who might be “eligible” for “immunity.”
That’s right, a few kinds of people, all of them having one thing in common: they can afford it. Some will be able to afford it with money, but the more notable cases will be those who buy immunity with influence.
“Investor protection” indeed – protect the position of the ruling elites by ensuring that only they can effectively deal in the currencies of the new world order.
And that’s not all, folks.
In a final gasp of absurdity, authors of the Act propose that the government is the last and final word on what a “foreign digital currency” means in India.
Therefore, in theory, Bitcoin could have its legality threatened on a routine basis – by fiat – at the whims of the same bureaucrats who stimulate its demand with their malfeasance in the first place.
What a wicked web you weave, would-be Bitcoin-killing Indian regulators.
However, every Indian this reporter has spoken to so far doubts the ‘bitcoin ban bill’ will pass. Somewhere, Gandhi’s grinning: “then you win.”
Last modified: May 20, 2020 2:13 PM UTC