The Centre is all set to push for a legislation that will ban cryptocurrencies, fining anyone trading in the country or even holding such digital assets, Reuters reported citing government officials in the know. At the same time, Finance Minister Nirmala Sitharaman has said that the government will take a "very calibrated position" on cryptocurrencies and blockchain technology.
"We want to make sure there is a window available for all kinds of experiments which will have to take place in the crypto world. It is not as if we are going to look inwards and say we are not going to have any of this. There will be a very calibrated position. Mixed messages are coming across the world. I don’t think there is a complete go this way or that way in this matter," the finance minister told a news channel recently.
The developments come amid expectations that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, banning all private cryptocurrencies and paving way for RBI's digital currency is likely to be tabled in Parliament during the current budget session.
The proposed piece of legislation is touted to be one of the world’s strictest policies against cryptocurrencies and would criminalise possession, issuance, mining, trading and transferring crypto-assets.
According to the Reuters report, the bill will give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied. Officials are confident of getting the bill enacted into law as the government holds a comfortable majority in Parliament.
If the bill is passed, India will become the first major economy to make holding cryptocurrency illegal. It is to be noted that even in China, where mining and trading are banned, possession has not been penalised.
Bitcoin, the world’s biggest cryptocurrency, has had a dream surge so far this year and is at a record high of $60,000 as of Saturday.
The RBI had, in 2018, banned crypto transactions following a slew of frauds after PM Modi's demonetisation move. The Reserve Bank of India had asked all regulated entities, such as banks, to stop any dealings related to private cryptocurrencies as part of that order, bringing crypto trading in India to a standstill. But the RBI embargo was overturned in March 2020 by the Supreme Court of India. However, there was still no clarity in crypto trading in the country.
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Despite the ambiguity, transaction volumes in India are swelling and 8 million investors now hold Rs 100 billion ($1.4 billion) in crypto-investments, according to industry estimates.
The Reuters report says 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 revolutionise international transactions. This is in line with Sitharaman's recent statements that there will not be a complete ban on cryptocurrencies or at least the technology part of it.
