India and regulation, 10 years in prison for those who use crypto

A new proposal for crypto regulation in India aims at imprisoning up to 10 years those who use private cryptocurrencies in any way.

This is reported by the Indian English-language newspaper The Economic Times, which reports on a high-level panel presented by an inter-ministerial committee on virtual currencies to the Ministry of Finance, together with the bill entitled “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019”. 

The Indian government set up an inter-ministerial committee (IMC) in 2017 to study virtual currency issues and propose specific actions to be taken in this regard. Now the government in India has received the group’s final report along with the bill. 

In the report, the committee highlighted the positive aspect of distributed ledger technology (DLT), suggesting various applications also in the financial services sector, such as monitoring loan issuance, collateral management, fraud detection, or claims management in the insurance sector and reconciliation systems in the securities market. 

But as far as private cryptocurrencies are concerned, after having noted the risks associated with them and the volatility of their prices, the committee recommends that they ought to be banned in the country and that fines and penalties be imposed for any activity connected with cryptocurrencies in India. 

With regard to the official digital currency, that is, the state currency, the committee has proposed to the government that a more open regulation be maintained. 

In addition, as virtual currencies and their core technology are still evolving, the Committee has proposed that the government establish a standing committee to review the issues addressed in the report as and when required. 

In other words: blockchain yes, crypto-rupee yes, bitcoin no. 

The regulation should, therefore, be applied as a ban to all actual cryptocurrencies, and in particular to decentralised ones, and would also apply to foreign operators. 

The draft law will now be examined by the country’s regulatory authorities before the government takes a final decision on it. 

If it were to be approved, it would imply that any direct or indirect use of cryptocurrencies in India would be punished with a fine or imprisonment, which should not be less than one year and which may extend up to 10 years in the event of recidivism. 

At the moment, however, as the Indian Finance Minister has explicitly stated, no bans are active in India.