There are indications that the government of India would put an end to cryptocurrencies once and for all, and adopt strict regulations for official digital currencies.
According to India’s Economic Times, an inter-ministerial consultation on a draft bill titled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” has been kickstarted by the government. And the bill has reportedly been circulated to all relevant departments of the government.
“The Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019 draft has been circulated to relevant government departments,” a government official aware of the details said.
Lots of departments within the Indian government (India’s Department of Economic Affairs, the taxation board, and the Investor Education and Protection Fund Authority) are in support of the notion which seeks to entirely ban all sales, purchase, and issuance of all types of cryptocurrency, the report said.
Last year, the Indian government created a committee for drafting cryptocurrency regulations. Considering that cryptocurrency could possibly be used for money laundering, the committee chaired by the finance secretary revealed that the existing Prevention of Money Laundering Act (PMLA) could be used to achieve the cryptocurrency ban.
The country’s ministry of corporate affairs in its review stated that lots of companies trading in cryptocurrency were operating on false inducements of massive returns. The ministry insisted that many of these companies run Ponzi schemes in an attempt to defraud gullible investors.
Reports came on February that the Indian police booked a resident of Mumbai for allegedly duping 12 people of $250,000 in a cryptocurrency scam. Detailed information revealed that the scammer required the victims to back an initial coin offering (ICO) for his new cryptocurrency ‘KBC coin.’ The scammer went ahead to guarantee the unsuspecting victims that by March 2018, a KBC coin which was worth $0.0056 then would rise to $1.
The country’s central bank, Reserve Bank of India (RBI) had earlier this month announced that RBI-regulated banks and institutions should prevent their customers from bitcoin purchase or any form of cryptocurrency. The apex bank also banned all Indian banks from rendering services to businesses dealing with virtual currencies.
The current speculation should not be a surprise to anyone. It’s not the first time we are learning that India is looking to ban cryptocurrencies. The country has since October 2018 been looking for a legal framework it could use to prohibit the use of digital currencies. As at that time, the government was promoting the decentralized ledger technology experiment.
However, there is a tendency that this situation will drag on for a while. A final law will be presented to the new government coming into power after next month’s election based on feedback from this consultation. We expect the process to take a little time.