The use of cryptocurrencies in India will be banned completely in the near future, according to an anonymous source claiming to be a senior Indian Finance Ministry official.
The source told Bloomberg that a new law being introduced in the parliament will ban the use of cryptocurrency in all its forms, and this will include overseas transactions.
The source added that investors will be granted a three- to six-month window to exit their positions after the new law comes into effect.
The official said the government is targeting cryptos because they are not backed by the Reserve Bank of India (RBI).
In January, India’s parliament introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for debate.
The aim of the bill is to create a facilitative framework for a central bank digital currency (CBDC) issued by the RBI, and to “prohibit all private cryptocurrencies in India.”
Sathvik Vishwanath, the co-founder and CEO of major Indian cryptocurrency exchange Unocoin, told Bloomberg that crypto stakeholders are anxiously waiting for more information.
He said, “If government goes ahead with banning all cryptocurrencies, except the one backed by the state, it will not make sense to continue our business in India. But we’ll have to wait and watch.”
In March 2020, India’s Supreme Court overturned the RBI’s April 2018 blanket ban on local banks catering to crypto-related businesses.
However, hopes for the legitimization of the sector were dashed in June 2020 when the Ministry of Finance proposed legislation that would again ban crypto assets.