India planning to ban cryptocurrencies with law

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NEW DELHI: India is planning to initiate a law to ban cryptocurrencies, as the government looks for a legal structure as being much more powerful than a circular from the Reserve Bank of India (RBI) in this regard. “A note has been moved (by the finance ministry) for inter-ministerial consultations,” a senior government official informed ET.

The stimulant for the order cabinet letter on March 4 settlement of the Supreme Court to cancel the April 2018 circular from the RBI that banks were not allowed to support cryptocurrencies, told one of the officials from the above team.

The write up will be submitted to the cabinet after dialogue and, later, to parliament. If it is the same as the previous letter, the law will be a blast to investors, exchanges, and other members contracting in virtual currencies such as bitcoin, experts said.

A high-level authority committee of government, in July 2019, drafted a letter, rule implementing for a ban on all forms of private cryptocurrencies. It had decided up to a Rs 25 crore fine and imprisonment of up to 10 years for anyone involved in them.

SC Raised De Facto Ban

At the time, the court had said: “While we have recognized… the power of RBI to take preemptive action, we are testing in this part of the order the proportionality of such measure, for the determination of which RBI needs to show at least some semblance of any damage suffered by its regulated entities. But there is none.”

The ruling raised a de facto ban on trading in bitcoin and other same financial service providers and had encouraged the establishment to say they would revise plans to invest and enlarge business in India.

Hence, the moving ahead has not been easy said by industry experts. Many banks in India banned transactions currency trades in India or overseas, without any particular note or communication from the RBI following the Supreme Court decision. Still, transactions have been going with other channels, the experts said.

July 2019’s regulated letter was too hard, said one of them. Such a proposed law would make it “illegal to hold, sell, issue, transfer, mine or use cryptocurrencies and, if passed in the current form, would completely decimate the crypto-industry in India,” said Amit Maheshwari, partner, AKM Global.

He expected the government would arrange a discussion with shareholders and the present bill would not be in the same form.

Subhash Garg, former finance secretary, team head had, in its report, recommended a ban on all types of private virtual currencies, hence it is told the RBI and the government to think about the legal launch of virtual currency.

The draft law drawn up by the team said any kind of cryptocurrency utilization directly or indirectly will be a punishment with a fine OR a jail, which will not be less than one year but may extend up to 10 years.

As per the draft law, a replication of crime will be illegitimate by jail of up to five years, which could extend to 10 years with a fine. The fine could be three times the damage created by the person, three times the profit made by a person, or up to ₹25 crores.

Also Read: Best Apps to Track Bitcoin Price