New Delhi: According to a Reuters report, the government’s cryptocurrency bill will ban the use of cryptocurrencies as a method of payment in India and seek to arrest those who violate the law without warrant and without bail.
Individuals or corporations who violate the rules set by the government on cryptocurrencies can face fines of up to Rs 20 crore and a jail term of 1.5 years. The government had introduced the bill during the winter session of Parliament.
Although cryptocurrencies will not be recognized as legal tender, all private cryptocurrencies will be regulated and not banned, as previously planned. The name of the bill has also been changed from ‘cryptocurrency’ to ‘cryptoasset’.
The central government has previously said it plans to ban most cryptocurrencies, a move that follows measures from China this September that intensified its crackdown on cryptocurrencies.
According to the bill’s summary, the government would convert digital currencies into a ‘medium of exchange, store of value and a unit of account’. Violation of any of these rules would also be ‘cognizable’, meaning that arrest without warrant is possible, and is ‘non-bailable’.
Although the government has previously stated that it aims to promote blockchain technology, according to some lawyers, the proposed legislation would be a blow to its use as well as the non-fungible token market in India. “If no payments are allowed and exceptions are not made for transaction fees, it will also effectively halt blockchain development and NFTs,” said Anirudh Rastogi, founder of law firm Ikigai Law.
The Centre’s plan to crack down heavily on cryptocurrency trading created a frenzy in the market and many investors exited with significant losses. Attracted by the flood of advertisements and rising prices of cryptocurrencies, there has been an increase in the number of investors in crypto assets in India.
Although there is no official data available, the industry estimates that there are around 15-20 million crypto investors in the country with total crypto holdings of around Rs 450 billion. According to the draft summary of the bill, the government is now planning to cut down heavily on advertisements enticing new investors as well.
The source added that self-custodial wallets that allow people to store digital currencies outside exchanges could also be banned.
The draft bill’s summary states that the tough new rules stem from central banks’ serious concerns about digital currencies and are intended to take safeguards to protect the traditional financial sector from cryptocurrencies.
The Securities and Exchange Board of India (SEBI) will be the regulator for crypto assets, the draft summary also stated.
The Reserve Bank of India’s virtual currency has not been clubbed with this bill and the central bank will control any issue related to digital currencies. The Bill also empowers the government to exempt certain activities in public interest.
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