India’s proposed cryptocurrency regulation bill could result in hefty penalties for violators: Those who infringe the law could be subject to arrest without a warrant as well as being held without bail, a Reuters report has claimed.
Citing a source and a summary of the bill—which has yet to be tabled but is expected to be introduced in the current session of Parliament—the report says the bill will include a “general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”.
Flouting the rules would be a “cognizable” offence allowing for arrest without warrant. It would also be “non-bailable,” the report said, citing a summary of the bill.
So far, the government has said it sought to promote blockchain technology, as well as plans for its own Central Bank Digital Currency (CBDC). However, the finance ministry in response to a question in parliament on December 6, said the bill would not seek to “boost” cryptocurrencies. According to the description of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 that was listed for introduction this session, “private cryptocurrencies” would be prohibited.
An earlier draft of the bill had proposed penalties of 5-10 years of imprisonment for offences ranging from "mining, holding, selling, issuing, transfer or use of cryptocurrency in the country" to related activities prohibited under the Narcotic Drugs and Psychotropic Substances Act, 1985 as well as holding of foreign exchange of Aggregate value exceeded one crore rupees under FEMA.
The draft bill provided for a 90-day amnesty period from the commencement of the act for crypto holders to declare and dispose of their crypto holdings.
However, Finance Minister Nirmala Sitharaman had said the draft bill was being reworked and a new bill would be introduced in Parliament after receiving Cabinet approval. The Cabinet is expected to discuss the Bill this week. The speed with which they decide on the final form of the bill, as well as its subsequent discussion in both Houses, will affect whether it comes into law in this session of parliament or the next.
The impact of a blanket ban would be significant on India’s cryptocurrency ecosystem. There are an estimated 1.5 to 2 crore crypto users in India, according to WazirX founder Nischal Shetty. India's crypto ecosystem also includes several domestic exchanges like WazirX, CoinDCX and Unocoin.
Cryptocurrency exchange CoinDCX became the country’s first crypto unicorn in August after raising a $90 million Series C funding round led by B Capital Group, which was founded by Facebook co-founder Eduardo Saverin.
