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A law banning cryptocurrency in India would penalize anyone who trades in the country or propose to keep such digital assets, a senior government official told Reuters, potentially hitting millions of investors entering the red-hot asset class.
The bill, one of the world’s toughest policies against cryptocurrencies, would criminalize possession, issue, mining, trade and transfer of crypto-assets, said an official with direct knowledge of the scheme.
The move is in line with the government’s January agenda calling for a ban on private virtual currencies such as Bitcoin while creating the framework for the official digital currency. But recent government comments have raised investors’ hopes that officials in a bullish market could ease.
Instead, the bill would give cryptocurrency holders a period of up to six months, after which penalties would be levied, the official said, adding that they did not disclose the contents of the bill.
With Prime Minister Narendra Modi’s government having a comfortable majority in Parliament, officials are confident that the bill will become law.
If the ban becomes law, India will be the first major economy to outlaw cryptocurrency. Even China, which bans mining and trade, does not penalize occupation.
The finance ministry did not immediately respond to an email seeking comment.
‘Greed’ over ‘Greed’
The world’s largest cryptocurrency, Wikipedia, hit a record high of 60,000 on Saturday, nearly doubling its value this year, as acceptance for payments increased with the support of high-profile supporters such as Tetla CEO Elon Musk.
Despite government threats of sanctions in India, the volume of transactions is swollen and 8 million investors now have 100 billion rupees (1. 1.4 billion) in crypto-investments, according to industry estimates. No official data available.
“Every month money multiplies quickly and you don’t want to sit on the sidelines,” said crypto-investor Sumanish Salodkar. “While people are panicking over possible sanctions, greed is driving these choices.”
The flow of user registrations and money in the local crypto-exchange bitcoins has increased 30 times over a year ago, said its chief executive Gaurav Dahke. One of India’s oldest exchanges, Unocoin added 20,000 users in January and February despite concerns over the ban.
Vik Fiser Vikram Rangala, chief marketing officer of the exchange, said that Zebpe “in February 2021, the volume of the day was 2021.”
Top Indian officials have called the cryptocurrency a “ponzi scheme”, but Finance Minister Nirmala Sitharaman has eased investor concerns this month.
“I can only give you this key that we are not closing our minds, we are looking for ways to experiment in the digital world and cryptocurrency,” he told CNBC-TV18. “A very calibrated position will be taken there.”
A senior official told Reuters there were plans to ban private crypto-assets while promoting blockchain – a secure database technology that is the backbone of virtual currencies, but could revolutionize international transactions, experts say.
“We have no problem with the technology. There is no harm in using the technology,” the official said. The grace period of the law.
Prison conditions?
In 2019, a government panel will recommend up to 10 years in prison for those who mine, generate, hold, transfer, dispose, issue or deal in cryptocurrencies.
The official declined to say whether the new bill included prison terms as well as fines or provided more details, but said the discussion was in its final stages.
In March 2020, the Supreme Court of India struck down the Central Bank’s 2018 order banning banks from operating in cryptocurrencies, leaving investors stranded in the market. The court has directed the government to take a stand on the matter and enact legislation.
The Reserve Bank of India (RBI) reiterated its concern last month, saying cryptocurrency posed a threat to financial stability. At the same time, the central bank is working on launching its own digital currency, a move that would also encourage a government bill, the official said.
Despite the feeling of joy in the market, investors know that the rally could be risky.
Naimish Sanghvi, who bet on digital currency last year, told Reuters, citing current concerns about a possible ban, that “if the ban is official, we have to comply with it.” “Until then, I participate in the market instead of selling in panic.”
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