As India’s authorities are advancing their work on new crypto-related legislation, a document released by the Indian government indicates that private cryptocurrencies will be regulated rather than banned, contrary to earlier suggestions.
A cabinet note on the proposed cryptocurrency bill says that cryptocurrencies will not be recognized as legal tender in India, but regulated as assets, as reported by local broadcaster New Delhi Television.
Under the plan, crypto exchanges will be allowed to trade in cryptoassets, and their activities will be regulated by the Securities and Exchange Board of India (SEBI). A cut-off date will be determined for cryptocurrency owners to declare their holdings.
Financial news site Quartz suggests that, as the SEBI regulates India’s capital and securities market, it is possible the agency will not allow investors to hold crypto assets on trading platforms outside India.
Violations of the law could be punishable with prison sentences of up to 1.5 years and financial penalties ranging between Rs 50m (USD 66,600) and Rs 20m (USD 266,400) to be levied by the regulator, according to the document.
Meanwhile, Finance Minister Nirmala Sitharaman recently stated that there was no decision to ban crypto-related advertisements in the Indian market, but that the country’s authorities would continue to monitor their contents.
Earlier reports cited contradictory sources, adding to market uncertainty. While some observers claimed that India’s government could adopt a more nuanced approach to cryptoassets, others argued that the country could ban crypto’s use in payments and transactions.
The first available draft of the Cryptocurrency and Regulation of Official Digital Currency Bill was available to the public via the Indian parliament’s official bulletin from November 23, but recent developments suggest that its scope has been amended.
The draft legislation’s declared objective was to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India,” but also “to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
Local industry observers expect India’s lawmakers to finalize the much-awaited crypto legislation during the legislature’s winter session which began on November 29.
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