The government of India has drafted a bill to completely ban cryptocurrencies and regulate official digital currencies, reports The Economic Times, April 26, 2019.
Things Go from Bad to Worse
Since its inception, the growth of the Indian cryptocurrency ecosystem has been continually stalled due to government and Reserve Bank of India (RBI) diktats.
It has now been more than a year since the government banned Indian banks from dealing with crypto-based business ventures and the state of the nascent industry looks as static as ever. In fact, things have only gone downhill as a number of cryptocurrency exchanges and entities have shuttered their businesses due to the challenging regulatory environment.
Now, it seems that things might go from bad to worse for the Indian cryptospace as according to The Economic Times, the Indian government has commenced inter-ministerial consultation on a draft bill to put a blanket ban on cryptocurrencies. This means that should the proposed bill be passed in the parliament, it would make it challenging for Indians to even hold or trade cryptoassets.
Government officials told The Economic Times that the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019″ draft has been circulated to relevant government departments for consultation before it is introduced in the Lok Sabha – the lower house of the Indian Parliament.
Various government departments, including the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA) have reportedly agreed to completely ban the “sale, purchase and issuance of all types of cryptocurrency,” the government official noted.
Depending on the feedback from the aforementioned ministries, an exhaustive law will be proposed to the next government that comes to power after the May general elections.
Offenders Could Be Prosecuted under the Money Laundering Act
An experimental committee formed by the RBI in August 2018 to weigh the pros and cons of cryptocurrencies observed that their use for money laundering could help in imposing a complete ban under the Prevention of Money Laundering Act (PMLA).
The ministries further noted that since the crypto-specific bill might take time to get implemented, the regulators could prosecute those found indulging in crypto-related money laundering and fraud schemes under the PMLA.