Last Updated on
Developments in the crypto industry have put cryptocurrencies in the spotlight over the last couple of months. Governments around the world are developing policies regarding cryptocurrencies, some positive and some ominous for the crypto industry.
In India, a committee formed by representatives from different ministries and regulatory authorities has issued a report that pushes for the banning of all cryptocurrencies in the country. The committee further recommends that there be the development and establishment of an Indian cryptocurrency called the E-Rupee. The report has come after rumors of a potential ban have been circulating in the country and stakeholders are not surprised by the report compiled by the committee.
The report extensively discusses blockchain and the potential it has to transform various industries. Areas such as land management are specifically mentioned in the report. The conclusion that the committee came to is that citizens cannot be permitted to hold or transact using cryptocurrency. However, banks and other financial institutions should be permitted to make use of digital ledgers in their business. Accompanying the report is a proposed piece of legislation that would make it illegal to hold, buy or sell digital assets.
While there is the suggestion that cryptocurrencies be banned, blockchain technology can still be used for purposes of research and education. Transactions involving cryptocurrency are still banned in those cases and the work done should avoid any and all kinds of crypto transactions.
In the report, the committee has encouraged the government to develop its own cryptocurrency. The “Digital Rupee”, if it is established, will become the only legal crypto that can be used within the borders of India. It is not clear where the committee stands in terms of allowing Indian citizens to engage in online crypto trading with the proposed E-Rupee.
The proposal of a government issued cryptocurrency has not come as a surprise as there have been signs pointing to the government’s intention to establish a cryptocurrency of its own. India’s central bank has already stopped its subordinates from offering services to crypto companies and it was suspected that this was because the bank was working on its own digital assets.
Outdated findings in the report
The committee has taken two years to come up with the report they have now published. It mentions that there are no countries in which digital assets are legal tender but this statement is not accurate today. A number of countries have made strides towards adopting cryptocurrency and in the United States, you can make some payments using cryptocurrencies.
Implications of the proposed ban
The “Banning of Cryptocurrency and Regulation of Official Digital Currency Act of 2019” would criminalize any crypto related activity. The bill prescribes a prison sentence of no less than one year and the sentences could be as long as ten years. There is also a proposition of fines that are up to three times the amount a person earned in their crypto trading.
If the government takes up the suggestion of the committee, India would become the first country to completely ban cryptocurrency. The crypto community in the country can take comfort in the fact that it is likely to take years before the legislation is debated by parliament and put into effect. By then, a lot would have changed in the crypto world and the government’s position may have shifted.