A draft of Banning of Crypto-currency and Regulation of Official Digital Currency Bill, 2019 proposes a 10 year jail term for those involved in crypto-currency trading. Economic Times reports that the prison sentence is for those persons who “mine, generate, hold, sell, transfer, dispose, issue or deal in crypto-currencies”.
The draft also makes the holding of crypto-currencies a non-bailable criminal offence, besides outlawing its trade.
“A crypto-currency is a digital or virtual currency that uses cryptography for security which makes it difficult to counterfeit”, defines Investopedia. “Many crypto-currencies are decentralised systems based on blockchain technology, a distributed ledger enforced by a disparate network of computers. A defining feature of crypto-currency and arguably its biggest allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference and manipulation.
Bitcoin is the most popular crypto-currency in the world.
Owing to its decentralised nature and immunity from government interference, there have been concerns regarding the high chances of using crypto-currencies for money laundering. Consequently, the ban on crypto-currency trading finds endorsements by various government bodies such as the Income Tax Department and the Central Board of Indirect Taxes and Customs (CBIC).
The panel drafting the bill is lead by Economics Affairs Secretary Subhash Chandra Garg. Several members of the Securities and Exchange Board of India (SEBI), representatives from investigative agencies and Central Board of Direct Taxes (CBDT) among others will also be part of the panel.
“If any conduct is punishable by any other law, this Act will be in addition to, and not in derogation of such law,” the article quotes the draft as proposing the penalty for crypto-currency users.
Observers were predicting regulations for Bitcoin from the government and private Bitcoin companies also launched an association to educate lay people on Bitcoin usage and benefits. This draft may come as a shocker to those who were expecting the some backing for the use of crypto-currency from the government.
While a stringent law will soon be in place to tighten the noose around people trading in crypto-currencies, the draft also advocates the introduction of an official digital currency for India. The ‘Digital Rupee’ will be introduced after consulting the central board of the Reserve Bank of India (RBI).