The teeter-totter between India and cryptocurrency looks set to end in heartbreak for those invested in virtual currency in one way or another.
According to emerging reports, India is set to propose a law banning cryptocurrencies. The move is in line with the bill floated in January titled ‘Cryptocurrency and Regulation of Official Digital Currency Bill’. As per the words of a senior government official, the proposal will impose a fine on anyone found crypto trading in the country or holding similar such digital assets.
Set to be the cause of anguish for the multitude of investors who have poured into the controversial asset class, the bill is touted to be one of the world’s strictest policies against cryptocurrencies. The bill aims to come down heavily, moving to criminalize possession, issuance, mining, trading, and transferring crypto-assets, as told by a senior government official in the know.
Also, the proposed bill now would give holders of cryptocurrencies up to six months to liquidate, after which time penalties will start to be charged. Recent quips by the Indian government on the issue of cryptocurrency had seemingly reassured investors.
As things stand now, however, with Prime Minister Narendra Modi’s government holding a comfortable majority in the parliament, the bill is almost certain to get enacted. A body blow for those looking to capitalize on the booming virtual currency market.
If and when, the bill becomes law, it would make India the first major economy to deem the holding of any cryptocurrency illegal. This is even a step up from neighbouring China, who despite banning mining and trading, does not penalize possession of cryptocurrency at the moment.
The legal vacuum under which cryptocurrency was operating is to be shattered, as there are also rumours of including a jail term on people found mining, generating, holding, selling, transferring, disposing of, issuing, or dealing in cryptocurrencies.
A government panel had recommended a jail term of 10 years on the offense in 2019. The RBI on its part has been vocal in citing risks to financial instability stemming from engaging in cryptocurrencies. It has been vying instead to launch India’s own form of cryptocurrency to plug any gaps.
India’s Finance Minister Nirmala Sitharaman has promised to arrive on a “calibrated position”, focusing on selective experiments to determine a future path for cryptocurrency in the country. As her plan takes shape, Bitcoin, the world’s biggest cryptocurrency, on the other hand, has hit a record high of $60,000 as of now.
Benefitting from the support lent by several high-profile backers, most prominent of them all being Elon Musk, Bitcoin has seen a galloping rise in the recent past. After Elon Musk, CEO of Tesla Inc and SpaceX, added #bitcoin to his Twitter bio, in a matter of seconds it led to a 15% rise in bitcoin’s value. Also, his decision for Tesla to buy bitcoins worth a whopping $1.5 billion has been a huge advertisement to those wanting to get a taste of crypto-currency for their own.
The craze has been felt on Indian shores too. Despite the see-sawing nature of the government’s stance on banning or levying tax on virtual currency, transaction volumes have engorged to as many as 8 million investors, estimated to hold 100 billion rupees ($1.4 billion) in crypto-investments, according to unofficial industry estimates.
Even as the government looks more open to promote blockchain, user registrations are only swinging upwards, a can be seen from Unocoin, one of India’s oldest exchanges, adding 20,000 users in January and February, despite worries of a ban.
As the industry continues to be divisive on cryptocurrency, there are also long-held fears that India could well miss the cryptocurrency bus if things pan out the way they are.
It looks like without being too cryptic or critical, we just have to await more developments. For now, India is just along for the ride in the cryptocurrency debate.
Stay tuned here for more updates.