India is working on a law that will ban and penalise cryptocurrencies, involving anyone trading or holding such digital assets in the country.
A senior government official, who pleaded anonymity as the contents of the bill are not public, disclosed this to Reuters.
The bill adjudged as “one of the world’s strictest policies against cryptocurrencies” will criminalise possession, issuance, mining, trading and transferring cryptocurrencies and its assets, said the official.
If the law scales through, India would become the first major economy to criminalise cryptocurrencies, which some top Indian officials called a “Ponzi scheme”.
China, it could be recalled, banned mining and trading, does not criminalise possession of cryptocurrencies.
The move to ban private virtual currencies such as bitcoin is consequent to a government agenda earlier this year.
It proposed to ban private virtual currencies while building a framework for an official state digital currency.
The bill, it was revealed, is expected to allow holders of cryptocurrencies up to six months to liquidate before enacting penalties.
Officials are confident of getting the bill enacted into law as Prime Minister Narendra Modi’s government holds a comfortable majority in parliament.
Recent government comments, however, have raised hopes of cryptocurrencies investors that the authorities might go easier on the booming market.
In the meantime, Bitcoin, the world’s biggest cryptocurrency, has hit a record high $60,000 over the weekend.
Bitcoin hit the latest record, almost doubling its value in the first quarter of 2021, after some high-profile traders like Tesla Inc. CEO, Elon Musk threw his weight behind it.
Another multi-billionaire Bill Gates, however, is calling against investing in bitcoin.
Media reported on February 28, 2021, that while Elon Musk is driving a buying frenzy in the cryptomarket, Bill Gates says anyone who has less money than the richest person on the planet should avoid investing in bitcoin.
Gates pointed out that the production of bitcoin is harmful to the environment, putting the climate into perspective.
On the other hand, Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite worries of a ban.
Indian Finance Minister, Nirmala Sitharaman, however, eased tension when she told CNBC-TV18 that her country is not completely shut out cryptocurrencies.
She said: “I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency.
“There will be a very calibrated position taken,” she assured.
Reuters also quoted the senior official as saying that the country will promote blockchain despite the plan to ban private crypto-assets.
Blockchain is a secure database technology that is the backbone for virtual currencies as well as a system that experts say could revolutionise international transactions.
“We don’t have a problem with technology. There’s no harm in harnessing the technology,” said the official.