finance
The finance ministry has proposed a bill aimed at banning all private cryptocurrencies in India, with the exception of those issued by the state. This significant legislative move seeks to regulate cryptocurrency activities within the country's territories.
The proposed legislation stipulates that no individual shall mine, generate, hold, deal with, issue, transfer, or use cryptocurrencies in India. However, it is important to note that the bill does not intend to prohibit the underlying blockchain technology. While the government can restrict specific cryptocurrencies like Ether, platforms such as the Ethereum blockchain that facilitate smart contracts remain unaffected by these regulations.
This allows individuals and entities to utilize underlying technologies for research and experimentation purposes without engaging in cryptocurrency transactions. For instance, a distributed ledger network could be employed to record financial transactions or offer various services independent of any cryptocurrency involvement.
According to the proposed bill, cryptocurrencies that are not issued by the Central Government shall not be recognized as legal tender within India.
The draft bill outlines severe penalties for individuals who engage in cryptocurrency activities. Offenses include mining, generating, holding, selling, or issuing cryptocurrencies, and the corresponding punishments are as follows:
| Offense | Maximum Imprisonment |
|---|---|
| Mining, holding, selling, issuing, transferring, or using cryptocurrency in the country (Draft Bill) | 10 years |
| Proceeds of crime from money laundering offenses under the Narcotic Drugs and Psychotropic Substances Act, 1985 (PMLA) | 10 years |
| Involvement in activities connected with proceeds of crime, including concealment, possession, acquisition, or use | 7 years |
| Holding foreign exchange with an aggregate value exceeding one crore rupees (FEMA) | 5 years |
The draft bill effectively prohibits the use of cryptocurrency as legal tender within India. Before becoming law, it awaits consideration and approval by both the Lower House and Upper House of Parliament, following endorsement from the Cabinet.