India Looks to Criminalise Trading, Mining, and Holding Cryptocurrencies: Report

India Looks to Criminalise Trading, Mining, and Holding Cryptocurrencies: Report
India's Prime Minister Narendra Modi addresses a gathering to mark the country's 75th year of independence, in Ahmedabad on March 12, 2021. (Photo: Sam Panthaky/AFP, Getty Images)

A proposed law in India would make it a crime to mine, trade, or even hold cryptocurrencies like bitcoin in the country, according to a new report from Reuters citing a senior government official. It’s estimated roughly 8 million people in India hold some form of cryptocurrency.

The move would finalise a government proposal from January that sought to create a digital currency for India while also banning any competitor cryptocurrencies like bitcoin, ether, and dogecoin. But even if the ban becomes law, traders in India might have a healthy grace period.

The latest draft version of the law, which has not yet been made public, would give cryptocurrency owners in India six months to get rid of their holdings before any potential penalties would be imposed, according to Reuters, though several other details are still unclear. For example, it’s not clear what kind of penalties anyone caught holding cryptocurrencies might face, though jail time doesn’t seem to be off the table.

While the Indian government has been hostile to cryptocurrencies for some time, there was recently some optimism in the bitcoin community that India might consider something like a tax rather than an outright ban.

The Central Economic Intelligence Bureau (CEIB), an arm of India’s version of the U.S. Treasury Department, floated a potential 18% tax on all cryptocurrency transactions back in December. That kind of hefty tax would bring in an estimated $US1 ($1.3) billion per year, but it now looks like the government will take a much more route action.

Prime Minister Narendra Modi likely has the votes to make the law pass, based on an assessment from Reuters, though it’s not clear what version of the law will eventually become set in stone.

Bitcoin was trading at roughly $US57,800 ($74,429) early Monday morning, according to CoinDesk, well down from a record high of over $US61,500 ($79,194) on Saturday. Ethereum is at roughly $US1,790 ($2,300), and Dogecoin at $US0.056 ($0.072).