India to propose law banning cryptocurrencies

16 March, 2021 12:00 AM printer

NEW DELHI: India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official said, in a potential blow to millions of investors piling into the red-hot asset class.

The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto assets, said the official, report agencies.

The measure is in line with a January government agenda that called for banning private virtual currencies such as Bitcoin while building a framework for an official digital currency. But recent government comments had raised investors’ hopes that the authorities might go easier on the booming market.

Instead, the bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official.

Officials are confident of getting the bill enacted into law as Prime Minister Narendra Modi’s government holds a comfortable majority in parliament.

If the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal. Even China, which has banned mining and trading, does not penalise possession.

The Finance Ministry did not immediately respond to an email seeking comment.

Bitcoin, the world’s biggest cryptocurrency, hit a record high $60,000 on Saturday, nearly doubling in value this year as its acceptance for payments has increased with support from such high-profile backers as Tesla chief executive Elon Musk.

In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4bn) in crypto investments, according to industry estimates. No official data is available.

“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines,” said Sumnesh Salodkar, a crypto investor. “Even though people are panicking due to the potential ban, greed is driving these choices.”

User registrations and money inflows at local crypto exchange Bitbns are up thirty-fold from a year ago, said Gaurav Dahake, its chief executive. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite worries of a ban.

ZebPay “did as much volume per day in February 2021 as we did in all of February 2020”, said Vikram Rangala, the exchange’s chief marketing officer.

Top Indian officials have called cryptocurrency a “Ponzi scheme”, but finance minister Nirmala Sitharaman this month eased some investor concerns.

“I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” she told CNBC-TV18. “There will be a very calibrated position taken.”


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