India Proposes Law To Ban Cryptocurrencies; Plans To Penalise Investors Holding Or Trading In Crypto Assets

The bill will be one of the world's strictest policies against cryptocurrencies, make ownership, issuance, mining, trading, and transferring crypto-assets illegal.

(Representative Image/Getty)

Mumbai: In a potential blow to millions of cryptocurrency investors, India plans to pass a new law banning cryptocurrencies and penalise anyone trading or keeping such digital assets in the country.

The bill will be one of the world's strictest policies against cryptocurrencies, make ownership, issuance, mining, trading, and transferring crypto-assets illegal, Reuters reported on Monday, quoting a government official with direct knowledge of the plan.

The report came days after Finance Minister Nirmala Sitharaman, in a recent TV interview, said that the government would take a "calibrated position" on cryptocurrency bring cheers to the industry, still at a nascent stage compared globally and raised investors' hopes that the government may go easier on the booming market.

When asked for comments, Sathvik Vishwanath, Co-Founder, and CEO, Unocoin, told ABP News, It seems to be a one-sided view with half the knowledge. We have better credible sources that are hinting that this is not the case. Day by day, we not only see speculation of the future of the cryptocurrency industry through media and investors but also at the government and legislation level."

 India's cryptocurrency market is estimated to be around Rs 3 lakh crore, with about 80 lakh investors in India trading in crypto assets in over a dozen exchanges.

The proposed bill reportedly would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied.

Sohil Merchant, Founder, and CEO, PocketBits, told ABP News, "If they (Government) plans a bill that says in the six months, the existing investors will have to sell their cryptocurrencies. My question is that who will be the buyer? You can't sell cryptocurrency outside India. The investors will be at a loss."

Billionaire investor Rakesh Jhunjunwala, also known as Warren Buffet of India, last month said that the country's regulators should ban cryptocurrencies such as Bitcoin.

Sumit Gupta, CEO and Co-founder CoinDCX, told ABP News, "We are consistently engaging with the government and relevant stakeholders for a positive framework. We are confident that a positive move at this point can unleash a host of opportunities for our country including the attention of high-profile global investors and technologists that can offer us the right backing in our pursuit to become a global power."

India's leading Cryptocurrency players, represented by IAMAI (Internet and Mobile Association of India), said that the proposed move to ban would have an adverse impact and lead to a loss in investments and hit 10 million Indian crypto customers. Hence, "we are urging the government to define the cryptocurrency regulation framework after due consultation with IAMAI and stakeholders such as India crypto-asset user groups and the exchanges that facilitate buying and selling."  

China does not penalize possession of cryptocurrencies even as it has banned the mining and trading of cryptocurrencies.

IAMAI appealed to India's Government not to ban cryptocurrency, proposing to develop robust mechanisms to regulate the ecosystem. Cryptocurrency has been generating jobs across various functions — legal, compliance, tech, marketing, business development, finance — in India and abroad. Given the scale and diversity, the good governance and regulation of India's cryptocurrency ecosystem is critical and will give impetus to the Government of India's Digital India vision.

IAMAI strongly feels that India needs intelligent, robust, and pragmatic crypto regulation, leading to the financial revolution and contributing to India's growth story.