Indian Government departments have started to discuss a draft bill to ban cryptocurrencies, titled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019", and have allegedly already authorized a complete ban on all cryptocurrencies, according to the Indian daily newspaper, The Economic Times.
Quite a few departments have joined the meeting and endorsed the proposal to ban all “sale, purchase and issuance of all types of cryptocurrency,” the report citing an undisclosed government official. The committee, which includes the representatives of Central Board of Direct Taxes (CBDT), the Department of Economic Affairs (DEA), the Investor Education and Protection Fund Authority (IEPFA), and the Central Board of Indirect Taxes and Customs (CBIC), were quoted in minutes of the meeting saying that “already there is lot of delay in taking action against cryptocurrency. There is an urgent need to ban sale purchase and issuance of cryptocurrency.”
As a matter of fact, the government had moved towards taking greater control of cryptocurrency last year, when they have formed a panel that would draft regulations of this type.
Meanwhile, the department representatives have argued during the meeting that cryptocurrency could be used for money laundering, which means that they could ban it altogether under the Prevention of Money Laundering Act (PMLA). However, until a detailed bill is actually brought and implemented, the ministry recommended that individuals who are using cryptocurrencies with the intent to defraud investors and/or launder money be prosecuted under the existing PMLA, the report said.
The departments are trying to back up this claim with the feedback that they will be delivering with the proposal of the bill. The Ministry of Corporate Affairs in their feedback state that individuals are involved in illegal and intransparent schemes, where they are issuing, selling, and purchasing cryptocurrencies “such as Bitcoin, Ethereum, and Cashcoin,” on false promises of massive returns, hence defrauding investors.
Meanwhile, Indian general election is currently being held, so a final law will have to wait at least until the end of May when the results will be declared and when the bill can be proposed to the new government.
In April 2018, after raising concerns about money laundering and consumer protection, the Reserve Bank of India (RBI) announced that regulated financial firms can no longer legally deal with cryptocurrencies. This caused panic selling and prices falling in India, despite the local crypto community urging users to remain calm. Then in July, India’s top court refused to overturn the ban, effectively banning people from trading cryptocurrencies.