Cryptocurrency has always wrestled with legal oppositions in India. At present, India’s official policy has banned the use of Indian bank accounts or cards to trade in cryptocurrency. In addition to this, India’s stand on cryptocurrency and its assets will get a lot more sombre after an unconfirmed report circulated in the first week of June. With around 30 lakh bitcoins circulating in the country, the proposed draft digital currency Bill, 2019 has left the crypto firms in consternation.
The report states that the government officials have proposed imprisonment for 10 years for the citizens who mine, hold, transact or deal with cryptocurrencies in any shape or form. Same will be imposed if someone is caught trading indirectly through an exchange.
However, a noteworthy point here is the central bank’s denial which is drawn to light by Varun Seti’s Right to Information request about RBI’s response on the same.
Varun Sethi who specialises in blockchain got the response from RTI on June 4th which clarified the RBI’s denial towards any official correspondence surrounding the crypto hot- talk about the draft. In the RTI, RBI says NO towards any knowledge of any such bill. With RBI’s denial, an enormous question has been raised about the authenticity and existence of the bill. Is there any draft like this or is it just an attempt to gain publicity?
Here is the link to the RTI
What makes the situation even more ironic is the Indian Government’s earlier consideration on introducing its own digital cryptocurrency which will be very similar to bitcoin. Furthermore, this cryptocurrency is supposed to fall under realms of Reserve Bank of India itself. Apart from the RBI, State Bank of India has also started its walk towards the tech-friendly currency by bringing together lenders and tech companies for using Blockchain to share information.
Indian crypto lovers have their eyes set out to the parliament as the Modi 2.0 government is supposed to shed some light on the murky image of cryptocurrency in the land. Only last month, in May, the secretary of the Department of Economic Affairs, Subhash Chandra Garg submitted a report which included the draft for crypto regulatory framework. The draft bill was expected to be introduced in the parliament during the budget sessions.
Hence, before we jump to any conclusions or go about selling our crypto assets at a loss under the fear of a “jail sentence”, here are a few checkpoints to keep in mind:
- We have not heard of any official documentation or announcement yet. As mentioned above, Varun Sethi, a lawyer specializing in blockchain, filed an RTI following a report from the Economic Times, for the RBI’s involvement with “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019″ draft. RBI disavowed any such knowledge.
- The news published by Bloomberg was copied by all news media including local and international without enough due diligence.
- In case there exist such bill, the latter part of supposed digital currency draft bill, 2019 was ignored which included Section 8 that could talk about jail terms for the activities such as terrorism and money laundering.
The following Questions are required to be answered before considering a 10-year jail term, if there is any, on using cryptocurrency in India:
- How is the government going to figure out the where-abouts of crypto holders? As per the bill, they want people to disclose within 90 days and dispose the cryptocurrency held by crypto holders. Do they expect people to come out with it, and/or make a list by using their history in exchanges? This has been tried in the past and did not work.
- Now even if the crypto holders declare that he/she has disposed his/her digital assets, how is the government going to verify the ownership of the wallet? If the individual says that he/she has sent it to someone abroad, how will the Government verify?
- How can Government ensure that an individual is a crypto hodler if they do not perform any transactions from banks to exchanges and vice-versa anymore? How will Government validate anything?
- Does Government have the manpower for processing, screening and restricting millions of civilians who have touched crypto at one point or another? How feasible is its deployment?
- It is against the free will of individuals and hence, the constitution if they are forced to selectively do business with their own wealth or money. Ofcourse, if it involves AML, terrorism, then jail term makes sense but otherwise, it won’t be a fair deal. So, one is innocent until proven guilty.
If true, how will the banning of cryptocurrency in India affect the country?
- India will lag behind in the emerging and rapidly growing market of cryptocurrency.
- With the banning of cryptocurrency, India will see the emergence of a new black market in the field.
- Earlier everyone was ready to pay taxes of 30% on crypto transactions like stocks. Then RBI stopped banks from using crypto. That created a situation where P2P transactions rose. Now, the Government cannot know of individual transaction to tax it.
- With the implementation of this ban, things will get even worse with AML and tax avoidance. if this is true, then we will not lose on crypto rather we will lose tax money.
- Situations can go worse for tax-collection part of the government. This will stop India from being a major player in the emerging technologies to which the countries like Dubai and many others are gladly seeing the confusion about the “ban” as a growth opportunity.
Additionally, cryptocurrency experts say that being distressed about this draft at this stage is of no use. Moreover, Vishal Gupta, CEO of many crypto-based startups says that it is too early to drive a conclusion on this matter. At the same time Sathvik Vishwanath, the CEO, and co-founder of Unocoin says that the bill won’t cause any effect on crypto transactions as they are completely online and almost impossible to tell its location.
Ashish Singh, CEO of bZIrd also points in the same direction saying that Indian crypto users keep their money abroad and their accounts aren’t actually in their own names.
At the same time a calming statement comes from an anonymous person who ran a cryptocurrency company in India saying that “Honestly, I don’t think the government will go this way. India is part of the G20, and countries within that have worked hard to regulate such currencies,”.
The popularity and blind belief in the news circulated clearly exemplifies how much we as human beings questions everything thrown towards us which makes it a point for media to exploit and benefit from it. On which side are you?