India will reportedly propose a law banning all cryptocurrencies as well as fining anyone found trading cryptos in the country or even holding assets. A senior government official with knowledge of the plan explains the bill would criminalize possession, issuing, mining, and transferring the digital assets.
If this bill passes, India would be the first major economy to make holding cryptocurrency illegal something that not even China has done, a country that banned mining and trading.
It seems that some in the Indian government are highly skeptical of cryptocurrency with a government official calling it an outright “Ponzi scheme”. India’s Reserve Bank voiced its concern over cryptocurrencies pointing directly to the financial volatility.
Interestingly enough, India’s central bank has been hard at work on launching its own digital currency, something this bill will push for.
Crypto investors were hoping the Indian authorities would ease up on cryptocurrency given recent comments by government officials. Finance Minister said, “I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency.”
There you go! #Bitcoin crypto will NOT be shut off.
CBDC does not mean shutting off other Crypto assets & utilities.
India, your time is here. Time to BUIDL and win 🚀
— Nischal (WazirX) ⚡️ (@NischalShetty) March 14, 2021
According to industry estimates, 8 million investors currently hold ₹100 billion which is about $1.4 billion.
In 2019, a government panel recommended an incredibly harsh jail sentence of up to 10 years on people who mine, transfer, sell, or otherwise use cryptocurrencies. A senior government official familiar with the bill declined to state whether or not the bill includes jail terms.
@Reuters reports that MoF is again considering banning crypto, jail terms for miners despite the Ministers’ statements last week https://t.co/tEQMALYYMs. Re-upping my editorials for @livemint on the policy choices before the GoI and @RBI for regulatory design and governance https://t.co/38xkAWzttS
— Richa Roy (@The_RichaRoy) March 15, 2021
Crypto investor Naimish Sanghi told Reuters “if the ban is official we have to comply… until then, I’d rather stack up and run with the market than panic and sell.”
Despite animosity towards cryptocurrency, government officials have a different attitude towards blockchain technology. The senior official said regarding blockchain “We don’t have a problem with technology. There’s no harm in harnessing the technology.”
Trubloq processes around 70% of A2P traffic in India, making it the world’s largest blockchain use case. @Tanla_India #trubloq @TRAI #Telecom #SMS #Blockchain #DLT #India #Largest #BlockchainUse https://t.co/gVkMxDkxDH
— Alexa Blockchain (@AlexaBlockchain) March 11, 2021
Finance Minister Sitharaman would further reiterate the government is not completely shutting down the idea of cryptocurrencies but the odds aren’t looking good.
Will it Pass?
Unfortunately, it looks like there’s a good chance the bill will pass. The bill is being fronted by Prime Minister Narendra Modi and India’s Parliament is under the control of the right-wing Bhartiya Janata Party.
According to the bill, its purpose is to create the infrastructure that would allow the creation of an official digital currency and to prohibit private ownership of other kinds of digital assets.
If the bill is ratified, cryptocurrency holders have up to six months afterward to liquidate their entire holdings or suffer the penalties.
As I’m sure you can imagine, I personally am not a fan of this news. I think it’s terrible that the Indian government is going this far in restricting cryptocurrencies of all kinds from the people. It goes against the very idea of cryptocurrency and why it was created in the first place. Even China, known for its authoritarianism, allows people to have Bitcoin.