We could have a formal ban on holding, trading and mining cryptocurrency in India, soon. It is expected that India will have a law that bans cryptocurrencies such as Bitcoin, Ethereum and Litecoin, in the country. If this law is implemented, it will mean that holding, trading or mining cryptocurrency will become illegal in India. There are expected to be provision for criminalizing any possession, trading, issuing, mining or transferring cryptocurrency assets in India. Incidentally, this isn’t the first time such a law has been mulled and has been in the works since the draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 first emerged a couple of years ago. Could we see a digital currency launched by the government of India?
The latest development on the possible ban on cryptocurrencies in India has been reported by Reuters, which says that if this does become a law, it’ll make India the first major economy in the world to make holding cryptocurrency assets illegal. China also bans mining and trading cryptocurrency but allows citizens to continue to possess whatever crypto assets they may already have. But what about those who already hold cryptocurrency? There is expected to be a provision that’ll allow cryptocurrency holders a specific period of time within which to liquidate their assets—post which, penalties will be levied if not completely liquidated and exited. The exact penalties are as yet unknown. There has been no official statement on the possible cryptocurrency ban, from the government, or the Reserve Bank of India (RBI) which is expected to formalise any regulatory frameworks for cryptocurrency in the country. Earlier this month, Finance Minister Nirmala Sitharaman told CNBC-TV18, “I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency. There will be a very calibrated position taken.”
India has never officially banned the trading and holding of cryptocurrencies thus far, but Reuters says industry estimates peg Indian investments at around 100 billion rupees ($1.4 billion) in cryptocurrencies. But the threat of a ban had always loomed large. In 2019, the Reserve Bank of India had issued a circular which confirmed that regulated entities in the country cannot provide cryptocurrency services in the country. The draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 proposes jail term of 10 years for selling, holding or dealing in cryptocurrencies. However, in 2020, the Supreme Court of India had struck down an RBI order from 2018 that clarified forbidding banks from dealing in cryptocurrencies, while saying formal laws need to be drafted.