- RBI had banned regulated entities to deal in crypto
- An Inter-ministerial Committee has recommended the ban of cryptocurrencies in July 2018
- Jail term for all users of cryptocurrency has been suggested
Early in 2018, The Reserve bank of India (RBI), India’s monetary authority decided to take a stance on the apparent growth of cryptocurrency in India by disallowing all regulated authorities such as Banks, NBFCs, etc., in dealing with cryptocurrencies. Since then the road to adoption in India has only gone downhill.
This “Crypto Ban” as it was called by the Media, put a huge dent on cryptocurrency volume in India. Exchanges were shut down, thousands if not millions of people gave in to the FUD and lost huge amounts of money.
But that didn’t stop the enthusiasts from doing what they love to do. In spite of this crackdown, cryptocurrency transactions continued to be on the rise. Exchanges discovered loopholes and effectively became P2P exchanges so that they do not have to have an intermediary in between.
HODLers Going to Jail?
According to a draft bill suggested by an inter-ministerial committee (IMC) in July 2019, formed under the Finance ministry, a suggestion was put forward to severely penalize any user of cryptocurrency, a part of the long and tedious process of cracking down on crypto. This comes as a setback for all crypto and blockchain aspirants in the country as the government seems unable to listen to the wishes of its citizens.
Proving its negative stance on cryptocurrencies, the report even specifically defines what it sees as a cryptocurrency. Cryptocurrency has been defined as "any information or code or number or token not being part of any official digital currency, generated through cryptographic means or otherwise, providing a digital representation of value which is exchange with or without consideration, with the promise or representation of having inherent value in any business activity which may involve risk of loss or an expectation of profits or income, or functions as a store of value or a unit of account and includes its use in any financial transaction or investment, but not limited to, investment schemes.”
Any holders, users, miners, or dealers of any form of cryptocurrency has been threatened with a penalty and jail term from 1 to 10 years in the report. If the draft bill becomes the law, cryptocurrency holders will have 90 days to declare and dispose of cryptocurrencies “in accordance with the prescription of the central government.”
A Glimmer of Light in the Darkness
Even though it may not be much, in spite of condemning cryptocurrency, the report also mentioned the substantial gains that can be achieved from researching in DLT and Blockchain technology. The report mentions “(DLT) can be used by banks and other financial firms for processes such as loan-issuance tracking, collateral management, fraud detection and claims management in insurance, and reconciliation systems in the securities market”, thereby showing that the government isn’t all but blind.
The decision regarding the ban will be discussed and announced in the winter session of the Parliament, but all polls point towards an apparent ban. It remains to be seen if the government shows any remorse towards cryptocurrency, and like much of Europe and America, realizes the advantages and benefits of allowing the growth of cryptocurrencies.