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Over the past few weeks, there have been rumors of the Indian government’s intentions to ban cryptocurrency in the country. The rumors have received more support and may as well be confirmed after an Indian blockchain lawyer, Varun Sethi, tweeted what he alleges is the first draft of the proposed bill.
What are #community comments ?
— Varun | Blockchain Lawyer (@Blockchainlaw91) July 15, 2019
The bill, which is titled “Banning of Cryptocurrency and Regulation of Official Digital Currencies”, will affect all cryptocurrency activity in India. According to the leaked bill, it proposes to ban or heavily restrict all crypto related activity in India. Although the rumors had already been in circulation, the leaked document has sent shockwaves around the Indian crypto community.
Indian Government’s Position On Cryptocurrencies
India already has strict rules and regulations regarding cryptocurrency. This bill would not be the first step the government has taken to place restrictions against cryptocurrency and crypto related activity.
In April 2019, the Economic Times reported that the bill had been viewed by a committee that was comprised of members from the Department of Economic Affairs, Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs (CBIC) among other regulatory bodies. The committee was of the view that acting against cryptocurrencies had already been unnecessarily delayed.
If the proposed bill passes, all crypto related activity in India will become illegal. Activities such as mining and trading are part of the banned activities and they will attract jail time of as much as 10 years. The leaked document states that no one will be permitted to mine, generate, hold sell deal in, transfer, dispose of or use cryptocurrency in the territory of India.
The bill also makes mention of the government of India’s supposed intention to launch a stable coin of its own. This may be in line with reports that surfaced last year claiming that the Reserve Bank of India (RBI) announced that it will look into issuing its own cryptocurrency named the Central Bank Digital Currency (CBDC).
Under the proposed bill, blockchain technology can still be made use of for educational purposes. However, it can only be used in the case that there is no form of crypto payments being made on the blockchain or for the work done in the education process. Blockchain can also be applied to any other services under the same condition that there are no cryptocurrency payments being processed.
Efforts to restrict and ban cryptocurrency in India have been consistent and the industry is at a huge risk in the country. The steps that the government has taken so far show that there is no intention to construct a framework that will accommodate cryptocurrency and make the crypto activity legal in the country
The position of the Indian government may be influenced by a number of scams and Ponzi schemes that have been run in India which are worth billions of dollars. There’s also the opinion that the recent demonetization of the 500 and 1,000 rupee notes, which was affected by some citizens converting their fiat currency to Bitcoin in a bid to hide their financial standing from the government, may have pushed this bill.
The Bottom Line
The Indian government continues to work towards restricting cryptocurrency use in the country and this may stem from a variety of factors. It is important to note that for now, the bill is a rumor and until it is announced by official channels, crypto activity such as Bitcoin trading will continue in India. If the bill makes it to parliament, it might take years before it is passed into law.