The government of India has reportedly launched several inter-ministerial consultations regarding a draft bill which has proposed a nationwide ban on cryptocurrencies.
The document, titled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019,” has now been shared with the appropriate government departments. This, according to a report from local news outlet the Economic Times of India (ET), which revealed the country’s government formed a dedicated panel to review drafted crypto regulations towards the end of last year.
Examining And Reviewing India’s Current Financial Regulations
India’s Finance Secretary Subhash Chandra Garg has reportedly been appointed to lead the panel, which has been tasked with examining the nation’s existing regulatory framework. The panel may look into the legality of services offered by India’s various crypto-related businesses, the ET reported.
Several government departments including the Central Board of Indirect Taxes and Customs (CBIC), the Central Board of Direct Taxes (CBDT), the Investor Education and Protection Fund Authority (IEPFA), and the Department of Economic Affairs (DEA) have all reportedly recommended that a complete ban be placed on India’s crypto-related businesses.
Proposing A Complete Ban On Cryptocurrencies
The proposed ban on such business activities includes placing restrictions, or prohibiting “the sale, purchase, and issuance of all types of cryptocurrency.” This, according to certain government officers who chose to remain anonymous, presumably due to security reasons.
According to the ET, the comprehensive set of regulations will be proposed and enacted towards the end of May 2019 - when India’s new government is expected to be elected. Moreover, a committee consisting of members from the CBIC, DEA, IEPFA, and CBDT were reported to be “of the view that already there is a lot of delay in taking action against cryptocurrency.”
The representatives of the committee also think that “there is an urgent need to ban the sale, purchase, and issuance of cryptocurrency” in India. One of the main reasons for supporting a complete ban on cryptocurrencies is that committee members believe they can be used to finance illicit activities such as money laundering and terrorism.
Recommendation To Punish Offenders Under Existing Laws
According to statements issued by India’s Ministry of Corporate Affairs, many people dealing in cryptocurrencies including Bitcoin (BTC), Ether (ETH), and CashCoin have continued to target unsuspecting investors. Quite often, these investors have been lured into making large investments in potentially fraudulent schemes that falsely promised huge returns, a report to India’s Economic Affairs department noted.
The report also mentioned such investment schemes have, for the most part, not been transparent and haven't been adhering to any existing regulatory guidelines. Notably, many of these seemingly promising investment opportunities have been giant Ponzi schemes which have been used on many occasions to “defraud gullible investors,” the Ministry of Corporate Affairs stated.
Finally, the report concluded by recommending that those found guilty of being involved in carrying out fraudulent crypto schemes should be prosecuted under India’s existing regulatory framework that deals with financial crimes and the country’s Prevention of Money Laundering Act.