The Narendra Modi government has already indicated that it is mostly cryptocurrencies planning to ban. This move of the government follows the measures adopted by China. China has intensified its crackdown on cryptocurrencies since September.
According to the bill’s summary, the Government of India may consider any person mining a digital currency as a ‘medium of exchange’, a store of value and a unit of account. It plans to ban all activities such as generating, holding, selling (or dealing) in general.
Violation of any of these rules would be ‘cognizable’, which means arrest without warrant is possible, and is ‘non-bailable’.
The source with direct knowledge of the matter was not authorized to speak to the media and declined to be identified. At the same time, the Finance Ministry did not respond to an e-mail sent for comment in this matter.
Although the government has said that it aims to promote blockchain technology, lawyers say the proposed law would also be a setback for the non-fungible token market in India.
“If no payment is allowed and no exceptions are made for transaction fees, it will also halt the development of blockchain and NFTs,” said Anirudh Rastogi, founder of law firm Ikigai Law.
The government’s plan to crack down on cryptocurrency trading has forced many investors to exit the market with losses.
There has been an increase in the number of crypto investors in India attracted by a large number of advertising and rising prices of cryptocurrencies.
Although there is no official data available, the industry estimates that there are around 15 million to 20 million crypto investors in the country. They have crypto holdings of about 45 thousand crores.
The source also says that self-custodial wallets may also be banned. Self-custodial wallets allow investors to store digital currencies outside crypto exchanges.
The draft bill summary states that following the concerns of the Reserve Bank, strict rules have been made regarding digital currencies. They aim to provide safeguards to protect the traditional financial sector from cryptocurrencies.
The draft summary also states that the Securities and Exchange Board of India (SEBI) will be the regulator for crypto assets.