The official said the new legislation, one of the most stringent in the world, would make it a criminal offence to own, issue, exploit, trade and transfer cryptocurrency. The move is in line with a government agenda in January calling for a ban on private virtual currencies such as bitcoin and a framework for the issuance of official digital currencies.
However, in order to appease cryptocurrency investors, even if the bill is passed, it will give everyone up to six months to liquidate before the violators are punished. India’s prime minister Narendra modi’s government has a majority in parliament, so the bill is likely to be passed.
If the ban becomes law, India will become the first major economy in the world to criminalize possession of cryptocurrency. Many Indian officials call cryptocurrency a “Ponzi scheme”, and the Reserve Bank of India is also worried that cryptocurrency poses a risk to financial stability.
However, despite the Indian government’s threat to ban it, cryptocurrency transactions are still surging. According to industry estimates, eight million investors in India now hold 100 billion rupees (US $1.4 billion) worth of cryptocurrency.
In 2019, a government assessment panel in India recommended that anyone who mines, issues, holds, sells, transfers or trades cryptocurrency be sentenced to up to 10 years in prison. However, the officials declined to say whether the new bill includes imprisonment and fines, or to provide more details, but said the discussion was in the final stage.