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India to Penalize Possession of Cryptocurrency: Report

Soon India could leave China behind to become the first country to penalize possession of cryptocurrency. A senior government official told Reuters that India will propose a law banning cryptocurrencies, fining anyone trading or even possessing such digital assets in the country, a possible blow to millions of investors piling into the hot asset class. The proposed Bill might contain provisions to penalize possession of cryptocurrency.  

The move is in line with the government’s January agenda, which called for the prohibition of private virtual currencies like bitcoin while establishing a framework for a national digital currency. 

The Rumored Bill 

According to the official, who has direct knowledge of the plan, the Bill, which is one of the world’s strictest policies against cryptocurrencies, will make ownership, issuance, mining, trading, and transferring crypto-assets illegal. 

The Bill will allow cryptocurrency holders up to six months to liquidate their holdings before facing fines, according to the official. Officials are optimistic that the bill will become law because Prime Minister Narendra Modi’s government has a large majority in parliament. 

In 2019, a government panel recommended that people who mine, produce, hold, sell, pass, dispose of, issue or trade-in cryptocurrencies face up to ten years in prison. The official wouldn’t say whether the proposed bill requires prison time in addition to fines or give any other information, but said the talks were nearing a conclusion. 

The Bitcoin Boom 

Bitcoin, the world’s most famous cryptocurrency, reached a new high of $60,000 last week, nearly doubling in value this year as its acceptance for payment has risen thanks to high-profile supporters including Tesla Inc CEO Elon Musk. Despite government threats of a ban, transaction volumes are rising in India, with industry reports estimating that 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto assets. There is no official data available. 

Statement by the FM 

At the India Today Conclave, The Union Finance Minister Nirmala Sitharaman has stated that cryptocurrency will not be completely banned. She further added that the government is not yet closing all doors to cryptocurrency, blockchain, and fintech. She claimed that a Cabinet note is currently being prepared in this regard, which will provide comprehensive details on the growth of cryptocurrency in India.  

“My take on this is that, while the Supreme Court has weighed in on cryptocurrency, and while the RBI may decide on official cryptocurrency, we are clear that we are not ruling out all options,” FM said. 

Update 5th April, 2021: The Economic Times reported that the government may allow six months of cryptocurrency play before deciding on the ban. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is scheduled to be introduced into parliament soon. The government may give investors three to six months to sell their cryptocurrency holdings until banning them.

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Rajat Chawda

Rajat is a student at the Institute of Law, Nirma University. Since a young age, he was fascinated by the technological advancements and his fascination with gadgets has helped him develop a keen interest in TMT Laws in his journey as a law student. He is associated with Mylawrd to further engage himself and learn in this area.

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