prison and $ 2.6 million in fines for offenders

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India’s crypto law, which seeks to ban the use of cryptocurrencies for payments, also provided for strict penalties for breaches, according to a crypto bill seen by Reuters. The crypto bill has not yet been made public.

The bill is on the parliamentary agenda for the current winter session, but has not yet been called for discussion. Last week, Finance Minister Nirmala Sitharaman said the bill would be introduced after receiving approval from the Union cabinet.

According to the Reuters report, the bill will impose a “blanket ban on any activity of any individual from mining, generating, holding, selling or dealing” in virtual currencies as a “medium of exchange, reserve of value and unit of account ”- all the characteristics of any legal tender.

Additionally, violation of these rules will be treated as a “known” offense, meaning that violators can be arrested without a warrant and detained without bail. Other offenses classified as identifiable crimes in India include murder, kidnapping and death for dowry, among others.

But according to Rahul Gaitonde, a crypto investor and adviser to blockchain companies, the harsh crypto ban should come as no surprise since a previous 2019 crypto ban bill also recommended that breaches be treated as offenses. recognizable offenses. The project “Cryptocurrency Ban and Regulation of the Official Digital Currency Bill, 2019” would form the backbone of the current bill.

An NDTV report also citing the proposed new bill said breaches of the crypto law could result in fines for individuals and businesses of up to 200 million INR, or 2.65 million. of dollars. The penalties are particularly high for a country with an average salary of less than $ 400 per month. NDTV’s report further added that violators could be sentenced to jail terms of up to a year and a half, but the government would provide a deadline for current investors to declare their crypto assets and comply with the new law.

The Indian government is also considering cracking down on crypto ads, Reuters reported. The negative impact of crypto ads that some see as “misleading” was heavily discussed at the crypto meeting chaired by the Prime Minister as well as the first parliamentary crypto meeting held last month.

The crypto bill would also designate the Securities and Exchange Board of India as the primary regulator of crypto assets and exchanges. While this means crypto exchanges will be regulated, the bill bans custodian wallets that allow users to store cryptocurrencies outside of exchanges.

The proposed new rules were crafted in line with concerns raised by India’s central bank, which has consistently called for a blanket crypto ban. The bill also says it aims to protect the traditional financial sector from cryptocurrencies and will put in place safeguards to back it up.

The proposed legislation could have a drastic impact on the entire blockchain ecosystem in India, which currently has around 10 million crypto users.

“If no payments are allowed and no exceptions are made for transaction fees, this will also effectively stop the development of blockchain and NFT”, as transaction fees must be paid with crypto, said Anirudh Rastogi, founder of the Ikigai Law firm, told Reuters. .

Gaitonde, the crypto investor and corporate advisor, said the rules outlined in the bill will allow people to buy and sell tokens, but potentially exclude Indian investors from participating in the larger tech ecosystem. off the decentralized ledger.

“While crypto regulations state that only licensed crypto exchanges can hold tokens, the universe of crypto projects available to people shrinks dramatically as it is impractical for such an exchange to list the tokens for each decentralized project,” Gaitonde said.

“Likewise, if the regulations prohibit the use of non-custodial wallets, then DeFi projects, NFT markets, decentralized software or dApps, blockchain-based games and these innovations become inaccessible,” he said. added. This is because the decentralized world largely supports such wallets, which are used to trade NFTs and other artifacts with crypto tokens.

However, Gaitonde still hopes the final bill will allow more flexibility with cryptocurrencies as the government has held multiple consultations with industry experts and has expressed interest in preserving innovation.

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