India reportedly planning to criminalise trading and even holding crypto-assets, even as Bitcoin continues to set records
India is reportedly close to introducing a law that would ban digital currencies, even as Bitcoin reaches new highs.
If passed, the measure would be one of the strictest in the world and would make India the first major economy to make holding crypto-assets illegal.
China, which has banned mining and trading in the assets, does not criminalise their possession.
The proposed law would impose fines on anyone found holding, issuing, mining, trading or transferring crypto-assets, Reuters reported, citing an unnamed senior government official.
It would reportedly give existing investors six months to liquidate their holdings, after which they would face penalties.
If proposed, such a bill would be likely to enacted into law due to the large majority in parliament held by Prime Minister Narendra Modi’s government.
The official declined to confirm whether jail terms were planned in addition to fines, but said the plans were in their final stages. A government panel in 2019 recommended jail terms of up to 10 years for cryptocoin-related offences.
The move comes amidst fresh surges in Bitcoin’s value in recent weeks, taking the asset’s total value to over $1 trillion (£720m) in February.
And over the weekend Bitcoin reached another landmark as it rose to over $60,000 for the first time, nearly doubling in value so far this year.
The upward movement has been bolstered by increasing mainstream acceptance from large companies and financial institutions, but governments, regulators and central banks have remained cautious.
India’s central bank in 2018 ordered the country’s banks not to deal in cryptocurrencies, but the country’s Supreme Court struck down the order in March 2020, prompting investors to join in speculation in the area.
The court ordered the government to draft a law on the matter, and in January the administration indicated it planned to take a hard line against crypto-assets.
More recently finance minister Nirmala Sitharaman had indicated the government would take a “calibrated” position, leading to some investor optimism.
But Reuters’ source said the position would be to outlaw existing crypto-currencies, while promoting the blockchain technology that underlies Bitcoin.
The country’s central bank is also planning to develop its own digital currency, a move that would reportedly be encouraged by the upcoming bill.
The India’s reserve bank last month reiterated previous warnings about cryptocurrencies, saying they pose risks to financial stability.