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The government of India has decided to bring crypto under a regulatory framework instead of a blanket ban. Finance minister Nirmala Sitharaman also said that the government has no proposal to recognize Bitcoin as a currency in the country but they are not collecting data on Bitcoin transactions.
Government of India Won't Ban Crypto But Regulate Them
According to a cabinet note seen by local media outlet NDTV, private cryptocurrencies would be regulated, not banned. The note also describes cryptocurrencies as a “crypto-asset” and suggests that crypto exchanges be regulated by the country’s financial Securities and Exchanges Board of India (SEBI).
Investors will be given a certain time frame to declare their crypto holdings and must transfer them to exchanges regulated by SEBI and no longer be allowed to keep crypto on foreign exchanges or in private wallets. Failing to do so could result in penalties within the range of Rs5 crores ($600 million) to Rs20 crores ($2 billion). This is part of a broader push from the government to prevent money laundering and terrorism financing.
The “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” that had been listed for the ongoing winter session of parliament said it would “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses."
However, the country’s finance minister Nirmala Sitharaman later clarified that the bill that was listed was an old one. Hence, a new bill is being made and reworked from the original.
Preventing Cryptocurrency Money Laundering
India is planning to amend its Prevention of Money Laundering Act (PMLA) to make provisions for cryptocurrency activity. Earlier this week, Finance minister Sitharaman said that the government is closely monitoring the risks that cryptocurrencies present. She also said that there is no decision to stop advertisements of digital currencies.
Just last month, Prime Minister Narendra Modi highlighted the volatile nature of cryptocurrencies calling on global regulators to regulate the sector and protect the youths.