India to propose cryptocurrency ban, penalising miners, traders: source

[webfact]

India to propose cryptocurrency ban, penalising miners, traders: source
By Aftab Ahmed and Nupur Anand

FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 13, 2018. Picture is taken February 13, 2018. REUTERS/Dado Ruvic/Illustration

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.

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

'GREED' OVER 'PANIC'

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 Inc CEO 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. 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 30-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."

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 but also a system that experts say could revolutionise international transactions.

"We don't have a problem with technology. There's no harm in harnessing the technology," said the official, adding the government's moves would be "calibrated" in the extent of the penalties on those who did not liquidate crypto-assets within the law's grace period.

JAIL TERMS?

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.

In March 2020, India's Supreme Court struck down a 2018 order by the central bank forbidding banks from dealing in cryptocurrencies, prompting investors to pile into the market. The court ordered the government to take a position and draft a law on the matter.

The Reserve Bank of India voiced its concern again last month, citing what it said were risks to financial stability from cryptocurrencies. At the same time, the central bank has been working on launching its own digital currency, a step the government's bill will also encourage, said the official.

Despite the market euphoria, investors are aware that the boom could be in danger.

"If the ban is official we have to comply," Naimish Sanghvi, who started betting on digital currencies in the last year, told Reuters, referring to existing concerns about a potential ban. "Until then, I'd rather stack up and run with the market than panic and sell."

(Reporting by Aftab Ahmed and Nupur Anand; Editing by Euan Rocha and William Mallard)

-- © Copyright Reuters 2021-03-15

 

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[Sharp]

Not according to the Indian Finance minister!

[Heng]

Yeah, they've flip flopped on this one a few times now.   Probably mostly because it would be difficult to enforce.   You can trade from the privacy of your own home without using a local exchange with virtually no evidence that you were doing so (a peer to peer bank transfer can plausibly be for anything).   In comparison, it would be easier to ban the consumption of alcohol which history has shown us is also virtually impossible.   

[Antonymous]

And so it starts.

Governments want to know what you are doing, particularly how you make and spend your money, so that they can extract taxes from you. The idea of an all digital, cashless society, in which they monitor all transactions through their own central bank crypto, gives them orgasms.

Governments are moving towards this end and no doubt figuring how they can stop trade in Bitcoin, etc within their territories. India is showing one way to do it.

[ukrules]

Any idiot MP can propose a new law on any given day, nothing ever happens because it's not backed by government.

We see this in Thailand all the time.

[metisdead]

A post using a derogatory ethnic slur comment toward Indian people has been reported and removed. 

[Crossy]

This does not surprise me in the least.

Our friends on the sub-continent are fiercely defensive of their currency (to the point I had to buy a computer with the "spare" Rupees I had when I finished a contract as nobody would change to something useful).

Anything that could interfere with the status-quo (no, not them) get's banned.

  

[Why Me]

The reason might be a preemptive move to limit protection if these currencies come crashing. Basically saying you are your own. Dont expect bankruptcy protection, protection against seizure of assets etc. And India has had its share of Ponzi schemes that mostly preyed on the poor.

And it makes sense too because bitcoins seem a greed driven asset. I've asked a lot of people how something that was worth $2000 a year ago can be $60,000 today without having a tangible product to its name. Sure I understand a suddenly productive gold mine or a Zoom or Netflix rocketing but what's the substance underlying digital currency? The answers were variants of don't look a gift horse in the mouth, shut up and buy. Ah, well.

[roquefort]

The Reserve Bank of India voiced its concern again last month, citing what it said were risks to financial stability from cryptocurrencies.

Haha, the real risks to financial stability come from the central banks themselves and their vast money-printing Ponzi schemes.

That's the reason for Bitcoin's exponential price rise. People don't trust fiat currencies any more.

[connda]

13 hours ago, webfact said:

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.

Tip of the iceberg.  Governments, banks, and central banks want crypto in it's current form doused with gas, lit, and thrown off a cliff.

But now that "Whales" have been entering the market?  Where to put cash that you have to pay the bank to hold?  It's a threat to "controlled" fiat.  Interesting times.