India could ban cryptocurrencies

Led by India's finance secretary Subhash Garg, a report was put together for the government and regulators to peruse, with suggestions of a possible official digital currency.

Subhash Garg, India's finance secretary
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Subhash Garg, India's finance secretary

A government panel in India is reported to be proposing a draft bill to ban cryptocurrencies, with jail sentences of up to 10 years and fines of up to 250 million rupees (Dh13.2bn) for anyone dealing in virtual currencies. The panel, headed by finance secretary Subhash Garg, put together a report for perusal by the government and regulators, and also suggests the creation of an official cryptocurrency, the digital rupee, to replace private virtual currencies.

A survey of 1,300 respondents by IndiaBits found 62 per cent own Bitcoin, making it the most popular cryptocurrency, followed by Ripple at 14%. In response to a question about how they would be affected by a ban, around 84 per cent said they would lose a lot of money. A further 36 per cent said their work was related to cryptocurrencies and they would either lose their job or would have to shut down business.

Shivam Thakral, co-founder and chief executive officer of cryptocurrency exchange BuyUCoin, told local newspaper The National in a Sunday report, “It’s quite regressive to see this kind of recommendation from the panel." He added, “More than us, I’m worried about the people who have invested their hard earned money in cryptocurrency.” An official ban on crypto could signal an end of his business model.

Supporting the report, India's finance minister Nirmala Sitharaman said, “If I compare several other countries where this kind of study has been done on cryptocurrencies, we have done very well,” she told The Economic Times newspaper. “It’s a very futuristic and well-thought out report.” Vikram Pandya, director of SP Jain School of Management’s FinTech programme in Mumbai, said, “Once money gets converted to cryptocurrency, there are no foolproof ways to ensure ‘know your customer’ compliance or trace the final end use.”

He added, "Given the black money and terrorism threat, I don’t see cryptocurrencies getting legal backing in India.”

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