Private Cryptocurrency May Be In Troubled Waters After Proposed Law By India

Crypto stakeholders in India are eagerly waiting for Indian govt to clarify the position on cryptocurrencies and their legal validity. For reasons best known to the govt, it preferred to keep things close to its chest and this is making crypto stakeholders of India nervous. But one thing is sure. Private cryptocurrencies would have a rough time and would be in troubled waters once the Indian law comes into force.

India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such cryptocurrencies, a senior government official told Reuters. The law could propose to criminalise possession, issuance, mining, trading and transferring of cryptocurrencies. But the law could give cryptocurrencies owners up to six months to liquidate, after which penalties will be levied.

The plan is to ban private cryptocurrencies while promoting blockchain. The Reserve Bank of India (RBI) voiced its concern against cryptocurrency again last month, citing risks to financial stability of India from them. But RBI has been working on launching its own digital currency that would be supported by the proposed law.

The government would allow a “window” for experiments on Bitcoin, blockchain and cryptocurrency. The fine details of such window are not available in the public but we have requested Indian govt through this portal to allow regulatory sandboxes and CoE like TLCECBI to continue to implement research and development works and projects in the cryptoassets, cryptocurrencies and similar fields.

While the RBI could have taken its own official decision on cryptocurrencies, the Finance Ministry is “very clear” that they would not be “shutting off all options.” RBI is a part of the Finance Ministry, but holds complete autonomy over monetary policies, issuance of the Rupee, and regulation of the Indian banking system. The Finance Ministry, on the other hand, handles macroeconomic policies, public financing, inflation, and stock markets.

Even Supreme Court of India in its March 2020 decision has held that RBI has power to regulate cryptocurrencies provided a law made by Parliament is in place. RBI cannot regulate cryptocurrencies by using circulars as that would violate Article 19(1)(g) of the Constitution of India. Under Article 19(1)(g) of the Constitution a citizen has the right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of the State to make a law imposing reasonable restrictions under Clause (6). And this is exactly what Parliament is doing through the proposed law.

We would update our readers from time to time till the proposed law is enacted. Even after enactment of the law, we would help crypto stakeholders to stay on the right side of the law.