At this moment in time, many of the worlds countries have opened up to the cryptocurrency market, whereas some have also introduced laws meant to regulate the industry. As such, the number of crypto-friendly countries is steadily growing.
Despite this aspect, recent reports indicate that India’s stance against digital currencies is slowly, yet surely getting worse. With this in mind, an inter-ministerial panel, put in charge with drafting up a regulatory framework for the cryptocurrency market, has reportedly proposed 10 years jail punishment for anyone connected to Bitcoin and other digital currencies.
The draft bill, titled “Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019” also includes several recommendations meant to prepare India and its government for the launch of a national central bank digital currency (CBDC). In terms of the punishable offences, the draft bill mentions that any person found guilty of mining, holding, selling, transferring, disposing, issuing and dealing with cryptocurrencies is in danger of facing up to 10 years of jail time, regardless of whether they are directly or indirectly connected to the punishable offences.
Additionally, the draft also mentions a penalty system, designed to penalize crypto holders with three-times the gain they have made while trading and holding digital currencies. To avoid being penalized, the bill offers individuals who currently hold crypto, a period of 90 days to report their holdings.
Lastly, the harsh bill also proposes the creation of a government-backed task force that would be used to monitor law abidance on the cryptocurrency market.
An aspect worth keeping in mind is that India’s population is mostly unbanked. Therefore, cryptocurrencies represent a great method of sending, receiving and storing wealth. This may serve as an argument to why the government has chosen to adopt such an unfriendly position towards the market. Unlike other regions, the crypto market in India can actually impact its economy.
Despite this aspect, India is in the process of gearing up for even stronger economic growth. Cancelling out the potential of digital currencies would represent an uninspired move that can lead to reduced economic activity, especially if mass-adoption is achieved in the future.
Contrary to numerous rumours, the bill has not yet been adopted, and remains in a draft stage. After further consultation, and hopefully listening to the public opinion, the Indian government will decide whether to adopt the bill as law or not.
A factor that may suggest the bill will be dropped is the Reserve Bank of India (RBI), which is the country’s central banking authority. According to one of their representatives, the RBI has not been involved in the creation of the legislative bill, nor has it been consulted, despite its potential role in ensuring regulatory oversight for the bill.
Last but not least, several members of the Indian cryptocurrency community have stated the bill’s main purpose might actually be to eliminate competition against the upcoming Indian centralized digital currency. Hopefully, the government will reconsider and adopt a friendlier cryptocurrency regulatory framework.