The Indian Government, after more than a year of back and forth discussions, has made its strongest indication yet that it will ban and even criminalize cryptocurrencies.
A government ministerial-level committee headed by Subhash Chandra Garg, secretary of the Department of Economic Affairs at India’s Ministry of Finance, has suggested that any activities involving cryptocurrencies, because of “the risks associated with them and volatility in their prices” could be outlawed and made a criminal act.
The report, released jointly by the Ministry of Finance, Ministry of Electronics and Information Technology and the Reserve Bank of India on July 22, noted “with serious concern” the “mushrooming of cryptocurrencies” that invariably have been issued abroad but have attracted many people in India to invest in them.
“All these cryptocurrencies have been created by non-sovereigns,” states the report, “and are in this sense entirely private enterprises…Therefore, the committee is of the clear view that… private cryptocurrencies should not be allowed.”
Some Indian media outlets are suggesting that punishments could even include 10-year jail sentences and India-based blockchain lawyer Varun Sethi told Asia Times that “the situation is bleak.”
“If the proposal in the draft bill is accepted,” said Sethi, “all non-government-backed cryptocurrencies will become illegitimate.” Although, he did suggest this issue has not reached its conclusion yet and that the report at this stage is only “a recommendation by an expert panel.”
“It shall be taken up for public debate now and then become a bill. Only once it is passed through the two houses of Parliament, will it become an act. So this is still a long journey,” Sethi said. But he admitted he was “pessimistic” about the outcome.
“The bill has been drafted by a very high-powered committee and chances of it being totally diluted are not very high,” Sethi said.
Cryptocurrencies were outlawed by the Reserve Bank of India in April 2018. The RBI explained its ban then by saying it had “repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.”
Despite the seemingly inevitable crypto crackdown, the government appears to be supportive of blockchain technology with Secretary Garg tweeting about the role the technology can play after the report was published.
The committee, wrote Garg, “is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services.” Garg added that blockchain “also opens the door for a possible official digital rupee,” but said that “private cryptocurrencies are of no real value and are “rightly banned.”