Bill banning crypto payments could mean jail time for violations

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Mumbai: Proposed legislation that would ban the use of cryptocurrencies as a form of payment in India also aims to make those breaking the law liable to arrest without warrant and detained without bond, source says and bill summary seen by Reuters.

Prime Minister Narendra Modi’s government has previously signaled that it plans to ban most cryptocurrencies – a move that follows steps China took in September that intensified its crackdown on cryptocurrencies.

According to the summary of the bill, the Indian government provides for a “blanket ban on all activities of any individual on the extraction, generation, possession, sale, (or) trade” of digital currencies as ” medium of exchange, store of value and a unit of account “.

Flouting any of these rules would also be “recognizable”, meaning that arrest without a warrant is possible and “not subject to bail,” he said.

The source, who has direct knowledge of the case, was not permitted to speak to the media and declined to be identified. The finance ministry did not respond to an email seeking comment.

Although the government has previously said it aims to promote blockchain technology, the bill will also deal a blow to its use as well as the non-fungible token market in India, lawyers have said.

“If no payments are allowed and no exceptions are made for transaction fees, it will also effectively stop the development of blockchain and NFT,” said Anirudh Rastogi, founder of Ikigai Law. .

The government’s plans to severely crack down on cryptocurrency trading sparked a frenzy in the market and several investors came out with large losses.

Attracted by a barrage of ads and rising cryptocurrency prices, the number of investors in crypto assets has increased in India.

Although no official data is available, industry estimates suggest that there are around 15-20 million crypto investors in the country, with total crypto holdings of around $ 6 billion.

The government now plans to sharply cut ads that seek to attract new investors, according to the draft summary of the bill and the source.

Self-custodial wallets that allow people to store digital currencies outside of exchanges are also likely to be banned, the source added.

The tough new regulations stem from the central bank’s serious concerns about digital currencies and aims to put in place safeguards to protect the traditional cryptocurrency financial sector, according to the draft summary of the bill.

The Securities and Exchange Board of India (SEBI) will be the regulator of crypto assets, the draft summary also says.

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