Several media reports starting Friday have reported that the Indian government was working towards formulating a policy that would make owning cryptocurrencies a non-bailable offence. In fact, the "Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019" draft proposes a 10-year prison sentence for persons who "mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies."
The law, if formulated is likely to make the trading and ownership of various cryptos including bitcoins, an illegal offence.
For those uninitiated, a cryptocurrency is a digital or virtual currency that uses cryptography for security and is generally based on blockchain technology, a distributed ledger enforced by a disparate network of computers. Bitcoins are among the most popular cryptocurrency flavours in the world.
The likelihood that such a policy could be formulated is debatable considering no central agency has accepted responsibility for the idea. However, it should no surprise if such a policy indeed arrives, given the negative perception that policy-makers have held on crypto-currencies. Various government agencies have called it a money-laundering activity. The Reserve Bank of India has many a times spread out cautionary circulars and even asked banks from supporting such transactions on their systems.
Former Finance Arun Jaitley in his 2018 Union Budget had specifically said that crypto assets were used in financing illegal assets. Subhash Chandra Garg, Secretary for Department of economic affairs in a media interaction had likened cryptocurrencies to dabba-trading.
In fact, The draft bill for banning cryptocurrency has been in the works for some time with Economic Affairs Secretary Subhash Chandra Garg reportedly leading the exercise. Reports also suggested that the Reserve bank of India, and other government bodies such as CBIC and CBDT were likely to be entrusted for the policy-making. A handful reports also documented an RTI answer from the RBI, claiming that the RBI was unaware of the policy.
Citing a document available on Scribd, reports suggested that the banking regulator was perhaps unaware of the new policy. It is reported that the central bank through an RTI (Right to Information) appeal confirmed that it was not a part of the discussion on the new policy. Varun Sethi, a lawyer, filed for an RTI questioning the validity of such reports and more information from the RBI. The RBI answered that it was not a part of the policy-making and also that it did not receive a copy of the draft bill.
The likelihood that such a policy could be implemented should not come as a surprise concerning various government bodies including the Finance Ministry and RBI have not been in favour of cryptocurrencies. Entities such as the Income Tax Department and the Central Board of Indirect Taxes and Customs (CBIC) have also endorsed banning of cryptocurrencies. Given such a narrative, a bill that prevents ownership and trading of cryptocurrencies appears evident.
Netizens and social media users questioned the angle of a 10 year non-bailable offence. A stricter law could help deal with the indulgence of cryptocurrencies given the risks to people unaware of such schemes. However in what appears as hypocritical approach, the RBI has been reportedly in favour of its own digital currency flavour. Two years ago, the RBI favoured the idea of releasing Lakshmi-Coins.
On Friday, an IANS report quoted an anonymous official as saying, "A decision on the launch of Digital Rupee would be taken after consulting the Reserve Bank of India (RBI)."
A draft bill has to be presented in the Parliament and win required approvals before it is enacted into a law.