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Nov 25, 2021
The Indian government has submitted a bill to prohibit the majoriy of cryptocurrencies
India’s government has submitted a bill to the country’s parliament that would seek to ban most cryptocurrencies, including bitcoin.
Renders of India’s new crypto ban bill
The draft legislation, titled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019, was published online Tuesday by the Lok Sabha Secretariat, an arm of the lower house of India’s bicameral legislature.
The bill formally seeks to amend the country’s Reserve Bank of India Act to ban “activities related to creation, trading or usage of virtual currency” through a central bank digital currency (CBDC) and proposes penalties for violations ranging from a fine up to 10 billion rupees ($152 million) to imprisonment of up to 10 years.
The proposed law, which appears on the assembly’s website, also calls for “the confiscation of property of the violators” and says it would be valid until Dec. 31, 2028.
While brief, the bill is nevertheless notable as it would prohibit cryptocurrencies through a blanket ban on any activity related to virtual currencies rather than by classifying cryptocurrencies as a type of financial asset.
The bill also calls for the creation of a digital rupee backed by the government, which will be legal tender with restrictions on its exchange for physical currency.
According to an explanation box attached to the proposed law, “India cannot remain untouched” from cryptocurrency despite having “a successful digital payment system in place,” due to the growing popularity of cryptocurrencies, which it believes has “the potential to aid in money laundering and terrorist activities.”
The move comes a day after the Supreme Court of India began a two-day hearing on a petition filed by a number of companies in addition to public interest litigations (PIL) challenging the Indian government’s decision to ban trading of cryptocurrencies and the penalization of banks and others who facilitate cryptocurrency transactions.
Three out of five judges on India’s Supreme Court bench said they will hear a plea challenging a banking restriction that prevents cryptocurrency exchanges from giving investors access to their money.
The country’s banking regulator, the Reserve Bank of India (RBI), has previously argued that all cryptocurrency trading is associated with “great risk” but stopped short of banning them outright due to an absence of legal grounds. However, it did ban financial institutions from working with cryptocurrency-related businesses in April 2018, leading to a number of exchanges being forced to shut down their local bank accounts.