- A recent draft bill proposing a jail term of 10 years for anyone dealing in cryptocurrencies has caused a stir in India and all over the world.
- The Indian government has been working on a regulatory framework for cryptocurrency over a year now. ‘
Crypto Community Criticizes India's Stance Towards Cryptos
Last week, Finance secretary Subhash Chandra Garg revealed that the report containing crypto regulation recommendation is ready to be submitted to the finance minister.
India is proposing a 10-year jail sentence for those who mine, hold, or transact with cryptocurrencies.
I highly doubt this will get passed, but if it does, it will have the opposite effect and actually drive adoption.
People don't like being told what to do with their wealth.
— Pomp 🌪 (@APompliano) June 7, 2019
While Indian news outlets claimed to have some knowledge of the crypto bill, it is unconfirmed whether the bill cited, proposing 10 year jail term, is the same as the one Garg panel will be submitting. Additionally, it has been reported per the right to information (RTI) request, The Reserve Bank of India, the central bank of India is not in the know of this proposed ban.
To 1/5 of the world's population
— CZ Binance (@cz_binance) June 7, 2019
On June 6th, Bloombergquint, who has been vague about its sources, the publication boldly wrote about India proposing a 10-year jail term for crypto use while providing no evidence to the legitimacy of the bill.
The author however shared an excerpt that states only certain activities are enlisted and no blanket ban on crypto use. Though Nikunj Ohri shared excerpts on twitter, he didn't share the details of the outlaw activities despite people asking for him to do so.
"for any of the activities mentioned in clauses (e), (g) and/ or (h) of sub-section (1) of Section 8"
So there is no blanket ban. Pls share snippet of the part of the bill specifying prohibited activities mentioned in section 8.
— Tushar Patel (@TuSharp91) June 7, 2019
The proposed punishment of a fine or imprisonment that ranges from one to ten years looks to be for some kind of specific activity or “intent of use” that could refer to activities like money laundering.
“The first thing to note is that there isn’t really a blanket ban and imprisonment for 10 years that people are making this out to be,” stated Tanvi Ratna, a policy analyst and Blockchain Lead at EY.
Lack of Clarity Regarding Crypto Regulations
The use of Bitcoin, however, is not encouraged in the country with its sale currently taxed in India. Moreover, there is an estimated three million bitcoin in circulation as well.
“It’s too premature to come to a conclusion on this,” Vishal Gupta, CEO of crypto-based startups like Binex and SearchTrade was quoted as saying about this private bill.
Bloomberquint also reported that a person holding crypto is required to “declare and dispose it within 90 days from the date of commencement of the act.” But the fact that the RBI has already banned banks from providing service to crypto exchanges, it needs further clarification how exactly the government expects people to exchange their cryptos for fiat.
“If they don’t declare, would the government impound electronic devices of more than 5 million investors? … If they declare, would the government offer to redeem their funds as per market price?” asks Kashif Raza, co-founder of Indian platform for blockchain and crypto regulatory news Crypto Kanoon.
For now, people need to remain calm as there is little information available about the bill and it's hard to understand the bill on the basis of a few lines on social media. Moreover, a bill is just a recommendation that may get rejected by the government. Even if it gets passed in Lok Sabha, it needs approval in Rajya Sabha and then by the president.