People, traders, exchanges, and other financial systems’ participants will not be permitted to deal in cryptocurrencies with penalties proposed in the draft law for any violation by corporates as well as individuals
The government’s draft bill on cryptocurrencies is likely to bar Indian companies and individuals from using digital currencies if cleared by parliament.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is expected to be introduced soon in the ongoing Budget session (of parliament).
People, traders, exchanges, and other financial systems’ participants will not be permitted to deal in cryptocurrencies, with penalties proposed in the draft law for any violation by corporates as well as individuals, NDTV reported.
The decision was taken after an inter-ministerial panel, including representatives from the Reserve Bank of India (RBI), felt that private cryptocurrencies will pose a risk to the financial stability of the country.
The bill, which proposes a blanket ban on all private cryptocurrencies, will also lay the basis for an official digital currency with ties to the RBI, which can regulate it, the report added.
The Centre’s draft bill comes days after car manufacturer Tesla, led by billionaire Elon Musk, announced a $1.5 billion investment in Bitcoin with plans to accept the cryptocurrency from customers purchasing its electric vehicles. This drove the digital money to an all-time high.
Both the Centre and the central bank have been cautioning against digital currencies and have advised all banks and financial institutions not to deal in them.
The RBI, through a circular in April 2018, had advised all entities regulated by it not to deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling them.
In mid-2019, a government committee had suggested banning all private cryptocurrencies, with a jail term of up to 10 years as well as heavy penalties for anyone dealing in digital currencies.
However, the Supreme Court in March 2020 overturned RBI’s circular, permitting banks to handle cryptocurrency transactions from traders and exchanges.