Penalty of Rs 20 crore or 1.5 years in prison for violating cryptocurrency standards: report

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India is considering appointing its capital markets regulator to oversee cryptocurrencies, according to people with knowledge of the matter, as authorities seek to classify them as financial assets.

Prime Minister Narendra Modi’s government, which plans to introduce legislation in the current parliamentary session, will likely give crypto holders a deadline to declare their assets and comply with any new rules, the people said, asking not to be identified because discussions are private.

The bill will likely use the term “cryptoassets” rather than “cryptocurrencies” and will not refer to the central bank’s plan to create its own digital currency, one of the people said.

Any violator could be fined up to 200 million rupees ($ 2.7 million) or up to a year and a half in prison, depending on the proposals, residents said.

The government could also consider prescribing a minimum threshold for investing in crypto assets to protect small investors, Bloomberg News reported earlier.

A spokesperson for the Ministry of Finance could not immediately be reached for comment.

Finance Minister Nirmala Sitharaman said last week that the government had reworked an earlier bill – which proposed to ban all private cryptocurrencies – to take new developments into account. There has been no proposal to recognize Bitcoin as a currency in the country, she added.

The crypto market in India grew 641% in the year through June 2021, according to an October report from Chainalysis, a crypto-analysis firm. The government is now considering taxing earnings from digital currencies, and calls have been made for stricter rules for virtual coin transactions due to the unregulated nature of the business.

Earlier this month, Modi held a digital currency review meeting and discussed that unregulated crypto markets cannot be allowed to become avenues for money laundering and terrorist financing.

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