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Government


INDIA'S PROPOSED CRYPTO BILL BANNING PAYMENTS COULD MEAN JAIL FOR VIOLATIONS

Although the government has previously said it aims to promote blockchain
technology, the proposed law will also deal a blow to its use as well as to the
non-fungible token market in India.

Representations of virtual cryptocurrencies are seen in this illustration.
Photo: Reuters/Dado Ruvic

Aftab Ahmed and Nupur Anand


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Mumbai: Proposed legislation that would ban the use of cryptocurrencies as a
method of payment in India also seeks to make those who infringe the law subject
to arrest without a warrant and being held without bail, according to a source
and a summary of the Bill seen by Reuters.

Prime Minister Narendra Modi’s government has previously flagged that it plans
to ban most cryptocurrencies – a move which follows measures by China this
September that intensified its crackdown on cryptocurrencies.

According to the summary of the Bill, the Indian government is planning a
“general prohibition on all activities by any individual on mining, generating,
holding, selling, (or) dealing” in digital currencies as a “medium of exchange,
store of value and a unit of account”.

Flouting any of these rules would also be “cognizable” which means an arrest
without a warrant is possible, and “non-bailable,” it said.

The source, who has direct knowledge of the matter, was not authorised to speak
to the media and declined to be identified. The finance ministry did not respond
to an email seeking comment.



Although the government has previously said it aims to promote blockchain
technology, the proposed law will also deal a blow to its use as well as to the
non-fungible token (NFT) market in India, lawyers said.

“If no payments are allowed at all and an exception is not made for transaction
fee then it will also effectively stop blockchain development and NFT,” said
Anirudh Rastogi, founder of law firm Ikigai Law.

The government’s plans to crack down heavily on cryptocurrency trading sparked a
frenzy in the market and several investors exited with significant losses.

Lured by a barrage of advertisements and rising prices for cryptocurrencies, the
number of investors in crypto assets has surged in India.

While no official data is available, industry estimates suggest there are some
15 million to 20 million crypto investors in the country, with total crypto
holdings of roughly Rs 450 billion ($6 billion).

The government now plans to also come down heavily on advertisements that seek
to woo new investors, according to the draft summary of the bill and the source.

Self-custodial wallets that allow people to store digital currencies outside
exchanges are also likely to be banned, the source added.

The tough new regulations stem from the central bank’s grave concerns about
digital currencies and aim to put in safeguards to ring-fence the traditional
financial sector from cryptocurrencies, the draft summary of the Bill said.



The Securities and Exchange Board of India (SEBI) will be the regulator for
crypto assets, the draft summary also said.

(Reuters)







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