NEW DELHI / MUMBAI (Reuters) – India will propose a law banning cryptocurrencies, imposing fines on anyone who trades in the country or even owns such digital assets, a senior government official told Reuters in a possible blow to millions of investors entering the country. red-hot assets piling up class.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalize possession, issuance, mining, trading and transfer of crypto assets, said the official, who has direct knowledge of the plan.
The measure is in line with a January government agenda calling for the banning of private virtual currencies such as bitcoin while at the same time building a framework for an official digital currency. But recent government statements had sparked investors’ hopes that the authorities would make it easier in the booming market.
Instead, the bill would give cryptocurrencies holders up to six months to liquidate, after which time fines will be imposed, the official said, who asked not to be named because the content of the bill is not public.
Officials are confident that the bill will be passed into law 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 holding cryptocurrency illegal. Even China, which has banned mining and trade, does not penalize property.
The Treasury Department did not immediately respond to an email asking for comment.
‘GREED’ OVER ‘PANIC’
Bitcoin, the world’s largest cryptocurrency, hit an all-time high of $ 60,000 on Saturday, nearly doubling in value this year as acceptance for payments increased with support from high profile backers like Elon Musk, CEO of Tesla Inc.
In India, despite the threat of a government ban, transaction volumes are on the rise and 8 million investors now have 100 billion rupees ($ 1.4 billion) in crypto investment, according to industry estimates. No official data is available.
“The money is multiplying rapidly every month and you don’t want to be on the sidelines,” said Sumnesh Salodkar, a crypto investor. “Even though people are panicking over the potential ban, greed is the driving force behind these choices.”
User registrations and money flows at local crypto exchange Bitbns are 30 times higher than a year ago, said Gaurav Dahake, the CEO. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite concerns about a ban.
ZebPay “did as much volume per day in February 2021 as it did in February 2020,” said Vikram Rangala, the exchange’s chief marketing officer.
Top Indian officials have called cryptocurrency a “Ponzi scheme,” but Treasury Secretary Nirmala Sitharaman this month allayed investors’ concerns.
“I can only give you this hint that we are not closing our minds, we are looking at ways for experiments to take place in the digital world and cryptocurrency,” she told CNBC-TV18. “A very calibrated position will be taken.”
However, the senior official told Reuters that the plan is to ban private crypto assets while promoting blockchain – a secure database technology that is the backbone for virtual currencies, but also a system that experts say could revolutionize international transactions.
“We have no problem with technology. There is no harm in using the technology, ”the official said, adding that the government’s measures would be“ calibrated ”to the extent of penalties for those who have not liquidated crypto assets within the grace period of the law.
PRISON CONDITIONS?
A government panel has recommended imprisonment of up to 10 years in 2019 for people who mine, generate, hold, sell, transfer, dispose of, spend or trade cryptocurrencies.
The official declined to say whether the new bill includes both jail terms and fines, or provided further details, but said the discussions were in the final stages.
In March 2020, India’s Supreme Court overturned a 2018 central bank order prohibiting banks from trading in cryptocurrencies, prompting investors to pile on the market. The court ordered the government to take a position and legislate on this.
The Reserve Bank of India reiterated its concerns last month, citing what it said risks to financial stability posed by cryptocurrencies. At the same time, the central bank has been working to launch its own digital currency, a move that the government’s bill will also encourage, the official said.
Despite the euphoria in the market, investors are aware that the boom could be in jeopardy.
“If the ban is official, we have to comply,” Naimish Sanghvi, who started betting on digital currencies last year, told Reuters, citing pre-existing concerns about a possible ban. “Until then, I would rather go with the market than panic and sell.”
Reporting by Aftab Ahmed and Nupur Anand; Edited by Euan Rocha and William Mallard