India is looking to introduce a law to ban trade in cryptocurrencies, as the authorities see a legal framework as being more effective after the Supreme Court overturned the government’s curb on the virtual asset class.
A Bloomberg report stated that the government would lean on a previously drafted bill that bans all forms of crypto transactions, and anyone caught holding them could face a hefty fine and up to ten years imprisonment.
People familiar with the development said the federal cabinet will discuss the bill shortly before it is sent to parliament.
Participants in India’s bitcoin market expressed their disappointment as they were hoping for some form of legislation to regulate the activities of local exchanges.
The move comes at a time when the nation’s cryptocurrency exchanges are at a nascent stage, primarily due to regulatory uncertainties. Still, a few local players are betting on global markets after most of their peers have shut down operations. Those trying to survive the uncertain phase are exploring options, including crypto-to-crypto, P2P, and derivatives products.
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It Is Making the Community Nervous
Although both the government and the Reserve Bank of India have not imposed any restrictions on the P2P transactions, they completely forbidden cryptocurrencies.
However earlier this year, the Supreme Court junked a circular issued by the central bank banning banks from cryptocurrency trading. The central bank directed all regulated entities in 2018 not to deal in virtual currencies or provide services for facilitating or settling these assets.
An Indian government panel tasked with looking into the cryptocurrency policy was also reportedly in favor of a sweeping ban on cryptocurrency dealings. Besides making it completely illegal within the world’s second-most populous nation, those breaking the proposed regulations may face up to a ten-year prison sentence as well as hefty fines of up to 250 million rupees ($3.63 million).
The Indian government has issued repeated warnings against digital currency investments, saying these were like ‘Ponzi schemes’ that offer unusually high returns to early investors.