India Grants Crypto Holders Reprieve Ahead of Likely Ban: Report
Policymakers in India will provide a transition period if a proposed ban on cryptocurrency usage is passed as expected.
According to a report by Bloomberg on Thursday, a senior Financial Ministry official – speaking under condition of anonymity – told Bloomberg cryptocurrency holders were likely to be given a three- to six-month period to close their positions.
Those still holding digital assets after the window closes will likely see their investments liquidated, per the report.
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After that, cryptocurrency usage in all aspects will be banned via a new law set to be introduced in the current parliamentary session via the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
See also: India Would Ban Private Cryptocurrencies Under Proposed Legislation
The bill is also expected to provide a framework for the Reserve Bank of India to issue its own digital currency.
India to ban cryptocurrency investment completely: Report
The Indian government is said to be levying a complete ban on cryptocurrency investment.
BloombergQuint reported the news on Thursday, citing an unnamed “senior Finance Ministry official.” The ban won’t be imposed overnight, according to the official, who said the government would give a three-to-six month transition period for existing investors to liquidate their investments.
Since India’s central bank doesn’t back cryptocurrencies, the government will ban their usage in all forms through a law that will be introduced in Parliament, said the official. The ban would also restrict crypto trading via foreign exchanges, per the report.
India’s crypto law will be modeled on China’s crypto regime, which has effectively banned crypto trading, according to the official. China, however, has only banned fiat-to-crypto trading since 2017. Crypto-to-crypto trading is still allowed in the country.
India’s proposed “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is listed for introduction in the ongoing Budget session of Parliament, which concludes on April 8, with a recess between February 15 and March 8.
The bill seeks to prohibit all “private cryptocurrencies” in India. The definition of private cryptocurrencies and the final text of the bill is not known yet. Still, India’s finance Minister Nirmala Sitharaman earlier this week suggested that private cryptocurrencies include all digital currencies apart from those issued by a central bank.
According to the official quoted above, the proposed bill “will be soon sent to the Union Cabinet for approval.”
Earlier this week, India’s junior finance minister Anurag Thakur also said that the bill “is being finalized and would be sent to the cabinet soon.”
As The Block has previously reported, the legislative process is lengthy in India. Once a bill is moved for consultation in the cabinet, it goes through various ministries for feedback. Once this process concludes, the bill then moves to Parliament. The Parliament has its own approval processes, including getting nods from the Lok Sabha (House of the People) and the Rajya Sabha (Council of States). Once the bill passes the Parliament, it then goes to the president of India for a final signature.
However, if the cabinet wants a specific bill to get passed, it can go for the ordinance route. Ordinances enable the Indian government to take immediate legislative action. Last week, there were reports that the government is likely to pass a cryptocurrency bill via ordinance.
Get ready for hefty penalty to legalize your crypto assets
NEW DELHI : The proposed cryptocurrency bill may allow holders of such currencies to exit the asset class before its anticipated ban but may put a heavy penalty on its conversion to a legal asset.
“The bill is yet to be finalized. The form and manner of declaration and how existing holders of the cryptocurrency should dispose of it will be prescribed either in the law or through the rules to be notified later," a finance ministry official said on condition of anonymity. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is scheduled to be tabled in the ongoing budget session of Parliament. The bill is intended to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India (RBI). The bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses," the Lok Sabha secretariat said in a bulletin.
The bill is likely to make mining, holding, selling, issuing, transferring, and using of cryptocurrency a punishable offence with a heavy fine or imprisonment or both.
“Certain media reports suggest that the government has decided to ban all private cryptocurrency and other key players of the industry. We would like to receive an intimation from the government on this. We would like to reiterate that the government of India is yet to release the draft of the proposed bill. As an exchange, we remain hopeful that the ministry of finance will definitely engage with the community before taking any harsh measures," said Sumit Gupta, founder of cryptocurrency exchange CoinDCX.
Investments worth $24 million went into crypto firms in 2020, up from a mere $5 million in the previous year, as per data from analysis firm Venture Intelligence. Crypto firms in India have also experienced a successful year since the lockdown in March 2020. Crypto trading in India has become a formalized sector over the past few years, because of the rise of various crypto exchanges.
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