NEW DELHI/MUMBAI (Reuters) – India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters 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, who has direct knowledge of the plan.
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, who asked not to be named as the contents of the bill are not public.
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.
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 Elon Musk.
In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto-investments, according to industry estimates.
“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines. Even though people are panicking due to the potential ban, greed is driving these choices.”
The senior official told Reuters, however, that the plan is to ban private crypto-assets while promoting blockchain – a secure database technology that is the backbone for virtual currencies.
A government panel in 2019 recommended jail of up to 10 years on people who mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies. The official declined to say whether the new bill includes jail terms as well as fines, or offer further details but said the discussions were in their final stages.
