The Indian authorities are preparing a bill to ban cryptocurrencies in the country, Reuters reports, citing a source in the Indian government. Indian citizens will face criminal liability or fines for trading, issuing, transferring, or possessing cryptocurrency.
If the bill is introduced, cryptocurrency holders will have six months to liquidate their assets. Otherwise, they will face fines. India could be the first major economy to ban cryptocurrencies entirely. Even China, which prohibits trading coins, does not outlaw owning them.
The agency notes that the cryptocurrency ban could affect millions of investors.
It is reported that the bill on cryptocurrency and regulation of the official digital currency aims to create favorable conditions for the development of an official digital currency to be issued by the Reserve Bank of India.
In addition, “the bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
In January, the Indian government already called for a Bitcoin ban while laying the groundwork for an official digital currency. Digital money was recognized as an ineffective and unreliable instrument for financial transactions. Besides, according to the Indian authorities, cryptocurrencies can be used in illegal schemes, and they are highly volatile.
Despite a possible ban, the volume of transactions in India is growing. There are about eight million investors in the country who own 100 billion rupees ($1.4 billion) of crypto assets.
This is not the first time Indian lawmakers have taken such a tough stance on cryptocurrencies. In 2019, a government group in India recommended that all private cryptocurrencies be banned, and those violating the ban be punished for up to 10 years in prison.
India's monetary policy regulator temporarily banned cryptocurrency transactions after a series of fraudulent activities in 2018, but the ban was overturned by the Indian Supreme Court in March 2020 after several exchanges and traders challenged it in court. The court also ordered the government to develop a law on the circulation of cryptocurrencies.
However, in February 2021, the Central Bank of India said that the cryptocurrency carries risks to financial stability.