There have been lots of speculations and rumours going around about India not being open to the idea of cryptocurrency and a possible ban of the legal usage of cryptocurrency. These speculations had even caused Libra to reconsider its decision to launch in India. There seems to be some light upon this hear-say.
An Indian government panel has recommended banning all private cryptocurrencies and a jail term of up to 10 years and heavy fines for anyone dealing in digital currencies, which could signal that India will most likely not indulge in crypto transactions for the near foreseeable future. A report and draft legislation have been drawn by the panel, which will be examined by the government and regulators before they make a final decision, the government said in a statement on Monday (22nd July 2019).
The panel has, however, asked the government to consider the launch of an official government-backed digital currency in India, to function like banknotes, through the Reserve Bank of India. Authorities in various countries are considering how to regulate cryptocurrencies, particularly after Facebook announced plans to launch one called Libra, because of risks to the financial system and consumer data.
The Indian Government has called out cryptocurrencies to be “Ponzi Schemes” for giving unusually high returns to its investors in the early days and has already launched warnings against it. The fact that crypto has been extensively used in money laundering also leaves a foul taste in the mouth for the government.
The government panel, headed by finance secretary Subhash Chandra Garg, recommended a fine of up to 250 million rupees (RM14.9mil) and imprisonment for up to 10 years for anyone who mines, generates, holds, sells, transfers or issues cryptocurrency.
“There is no underlying intrinsic value of these private cryptocurrencies,” the panel said in its report submitted to the finance ministry.
After this revelation, Industry officials expressed dismay and the hope the government would not introduce a ban.
“If the government decides to take such a drastic step then India will stand to lose out significantly on the technology front,” said Sathvik Vishwanath, co-founder, Unocoin, an Indian virtual currency.
Nischal Shetty, CEO of WazirX, another Indian cryptocurrency exchange, said, they were still hopeful that the panel’s report would not be accepted in its current form.
“Banning cryptocurrencies is a regressive step and no country or government should ban a new technology such as this.”
The panel was set up in 2017 by the then finance minister, Arun Jaitley, after reports of extensive money laundering with the use of digital currencies.
If the cryptocurrency were to be banned in the country, we would definitely miss out on the possibilities and opportunities it could bring forth, not to mention, we would lag behind all the nations welcoming crypto with open arms (China being one of them). Mining currencies and crypto-exchanges could also provide a huge opening for job opportunities which could prove to be detrimental for our economy in the long run.