Plans to restrict the use of cryptocurrency in India have been in the works for a couple of years now. Up until a few months however, the Supreme Court had deemed attempts by the Reserve Bank of India to ban crypto assets as unconstitutional. Most recently the government has been planning a new action against the digital currency, which has seen crypto advocates in the nation protest against the proposals to criminalise the holding of private crypto-assets.
The most recent update has seen the proposal of a new law which will result in fines for anyone who trades or even holds crypto assets country-wide. If the new bill is enacted it would make cryptocurrency illegal and make possession illegal. Up until now, no major economy has made the holding of cryptocurrency illegal, however the possibility remains that the industry is set to be regulated, rather than suppressed.
An official spoke to Reuters and commented on the proposed ban, revealing that investors will be provided with six months to liquidate their crypto assets before a penalty is imposed, adding that while private cryptocurrencies are under scrutiny by the government, blockchain technology is actively being promoted and supported by the Indian government.
Union Finance Minister Nirmala Sitharaman brought up the possibility of not having a complete ban on cryptocurrency in an interview with India Today, suggesting that there may be some wiggle room, despite the seemingly blank-style ban proposed earlier.
"My view on this is that of course the Supreme Court had commented on cryptocurrency and while the RBI may take a call on official cryptocurrency but from our side, we are very clear that we are not shutting off all options".
The minister further elaborated:
"A Cabinet note is being prepared. It's almost nearing completion and then it will be taken to the Cabinet... we will allow a certain amount of window for people to experiment on blockchain and bitcoin."
The proposed ban on cryptocurrencies has been met with outrage from the industry, particularly following the recent Bitcoin surge this year. There were protests from crypto and blockchain advocates following the initial proposal, and there has been a strong sentiment of support from fintech institutions.
While this most recent proposal to restrict and ban cryptocurrencies by the government is the most forbidding, it is not the first time India has attempted to ban cryptocurrencies. In 2018 the Reserve Bank of India banned cryptocurrencies, a move that was not held up by the Supreme Court and deemed unconstitutional. As India’s most recent attempts to ban cryptocurrency unfold, other countries will surely be watching to see the impact this has.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.