Using Bitcoin Could Lead to 10 Years’ Jail in India: Rumor or Reality?
India’s crypto ecosystem is edgy again as the government’s unfavorable stance on cryptocurrency continues. In a draft bill, the inter-ministerial panel — a committee tasked to draft regulations for the crypto sector — has reportedly proposed a jail term of up to 10 years for anyone having a marginal connection with Bitcoin or its ilk.
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Additionally, the recommendations shed light on the government’s ambitious plan to launch a national cryptocurrency. Despite the government’s negative slant, local crypto proponents told Bitsonline they are confident the bill will not actually pass, and have suggested that all is not lost for the crypto industry.
A Wrong Turn
The Indian government is doubling its efforts to proscribe cryptocurrencies completely. A report from Bloomberg Quint suggested the inter-ministerial panel’s proposed draft bill, dubbed “Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019” calls for heavy penalties and even a jail sentence for individuals dealing with digital currencies.
Besides proposing an outright ban on cryptocurrencies, the draft bill considers possessing digital currencies as a non-bailable offence. If legislated, individuals who “mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies directly or indirectly” could face jail time of up to 10 years.
It has proffered a monetary penalty system that purportedly will penalize crypto holders a value equivalent to three-times the gain made by an individual, or thrice the loss to the country’s economy.
Moreover, any individual currently holding cryptocurrencies will have 90 days to declare their wealth. Also, it demands the government form a specific regulatory body to monitor cryptocurrency.
Just a Draft Bill, Not a Law
While on the surface it may appear to be the end of digital currency in India, local crypto advocates pointed out the proposed bill is just a suggestion and would not be made into a law. Moreover, the draft bill is still yet to spelt out publicly.
In a personal interview with Bitsonline, founder of Indian cryptocurrency exchange WazirX Nischal Shetty optimistically stated:
“Our Prime Minister has been a big proponent of Digital India. He’s also been a big promoter of Startup India. So while the current news may be shocking, we need to realize that even if it’s true, it’s just a draft suggestion by a Government appointed a committee. Whether the Government accepts this or not, only time will tell. All in all, I believe we’re part of a new India that is gearing up for rapid economic growth. In such a scenario, my gut feeling says that our Prime Minister will ensure India participates in crypto.”
Moreover, Shetty also launched a campaign on Twitter dubbed #IndiaWantsCrypto. Since February he has been tweeting daily to the Prime Minister and Finance Minister of India to show the benefits of cryptocurrencies. He has made efforts to educate the Indian government on cryptocurrency and its benefits, but as of today there has been no response from the government.
Similarly, prominent crypto evangelist Anthony Pompliano tweeted that it would be unlikely for the government to pass such a bill as it would lead to further adoption. Many Indian crypto users have previously stated that banning cryptocurrency will prompt the rise of a parallel black market trade in digital currencies.
Keeping RBI out of Play and Plans of Digital Rupee
The inter-ministerial panel consists of consultation members from the Department of Economic Affairs (DEA), the Securities and Exchange Board of India, the Central Board of Indirect Taxes and Customs (CBIC), the Central Board of Direct Taxes (CBDT), and others. The panel is led by Subhash Garg, India’s Economic Affairs Secretary and Finance Secretary.
The select committee had been working on the bill for quite some time, and just last month, many media outlets reported that the bill was circulating around various government departments for final suggestions.
However, the country’s central banking authority, the Reserve Bank of India (RBI), recently denied having any involvement in the making of the proposed draft bill that would outlaw cryptocurrency. Moreover, they acknowledged that the non-friendly bill had not been offered for review to the RBI.
Keeping RBI out of play isn’t an ideal decision as it has been crucial in regulating cryptocurrencies over time. The Central Bank of India interdicted all institutions last year in April from working with any crypto firms.
Meanwhile, government officials have stated that RBI will consult in developing the national cryptocurrency — dubbed the Digital Rupee.
Commenting on the plans for the Digital Rupee, an anonymous government official stated “A decision on the launch of Digital Rupee would be taken after consulting the Reserve Bank of India (RBI),”
The news comes at a time when the head of the Bank for International Settlements (BIS), the central banker to the world’s central banks, has repeatedly been warning against issuing a central bank digital currency (CBDC).
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Images via Pixabay, A.Savin (Wikimedia Commons)