India has proposed a law to ban the use of cryptocurrency altogether, with a potential non-bailable prison sentence of up to 10 years for offenders.
Bloomberg initially reported on this development on June 6, 2019. It noting that a bill has been proposed to attack those who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies directly or indirectly” in the nation of more than 1.3 billion people.
The draft “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019” also includes a provision that it will be an additional punishment to any conduct punishable under other laws, not an exemption from those punishments. The potential for fines equivalent to capital gains from cryptocurrency investment are also in the proposed bill’s language.
Though still in its draft phase, Bloomberg noted that the proposed bill is the result of direct consultation with the Reserve Bank of India (RBI). It also noted that the bill “has been recommended by a panel headed by Economic Affairs Secretary Subhash Chandra Garg and comprises members from the central bank, Securities and Exchange Board of India, Central Board of Direct Taxes and investigative agencies, among others.”
This potential shift in policy is a significant change from signals that were coming from India only a few months prior. In late December 2018, interviews from officials within RBI claimed that “there is a general consensus that cryptocurrency cannot be dismissed as completely illegal.”
But last month, the economically restrictive Narendra Modi won a second five-year term as prime minister by large margins. Bloomberg reported that India’s central government may approve a “digital rupee” crypto asset, which would serve as legal tender. While it’s unclear what the draft bill may ultimately become, the emphasis on a fiat digital currency and
potential consequences for unsanctioned cryptocurrency users does not appear to be a positive step for bitcoin adoption.