India proposes to ban cryptocurrencies and punish miners
India is proposing a law banning cryptocurrencies with a fine for anyone trading in the country or even owning such digital assets in a potential blow to millions of investors, a senior government official told Reuters.
The official, who has direct knowledge of the plan, explained that the bill, one of the most stringent policies in the world against cryptocurrencies, would criminalize the possession, issuance, mining, circulation and transfer of cryptocurrencies.
The measure is in line with the government's January agenda that called for a ban on private virtual currencies, such as Bitcoin, while building a framework for an official digital currency.
But recent government comments have boosted investors' hopes that the authorities may be easier in the booming market.
Instead, the official said: The bill gives holders of cryptocurrencies up to six months to liquidate, after which penalties will be imposed.
Officials are confident of turning the bill into law, as the prime minister's government enjoys a comfortable majority in parliament.
If the ban becomes law, India will be the first major economy to make holding digital currencies illegal, and even China, which has banned mining and trading, does not penalize possession.
Despite government threats to ban in India, the volume of transactions is ballooning, and there are now 8 million investors with $ 1.4 billion in crypto investments.
One cryptocurrency investor said: Funds are multiplying rapidly every month, and although people are panicking about the potential ban, greed is the driver behind these options.
User registrations and money flows on the Bitbns local cryptocurrency exchange are 30 times more than a year ago.
Unocoin, one of India's oldest exchanges, added 20,000 users in January and February, despite concerns about the ban.
ZebPay achieved massive volume daily in February 2021, and it did so throughout February 2020.
Senior Indian officials described the cryptocurrency as a Ponzi scheme, that is, a form of fraud, but this month the finance minister eased some investor concerns.
"I can give you this evidence that we are not closing our minds, we are looking for ways in which to conduct experiments in the digital and cryptocurrency world, and there will be a very calculated position to be taken," she said.
However, the senior official told Reuters: The plan aims to block private crypto assets while promoting blockchain technology, which is the backbone of virtual currencies and could revolutionize international transactions.
The official added: We have no problem with technology, nor harm from harnessing technology, adding that the government's actions will be counted within the scope of the penalties imposed on those who did not liquidate the encrypted assets during the grace period of the law.
In March 2020, the Supreme Court of India annulled an order issued by the central bank in 2018 preventing banks from dealing in cryptocurrencies, which prompted investors to merge in the market, and the court ordered the government to take a legal stance and drafting in this regard.