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Indian gov't panel seeks total ban on private cryptocurrencies, up to 10 years in jail for abusers

Indian gov't panel seeks total ban on private cryptocurrencies, up to 10 years in jail for abusers
A total ban on private cryptocurrencies has been approved by a government panel in India which also recommended a 10-year prison sentence for anyone dealing with unregulated digital assets.

After nearly two years of work, the inter-ministerial committee (IMC), chaired by the economic affairs secretary, has submitted its final report to the government, together with draft legislation seeking to ban crypto trading in the country. It also recommended setting up a 'Digital Rupee' that would be issued by the Reserve Bank as legal tender. 

The Committee has recommended a law banning the cryptocurrencies in India and criminalizing carrying on of any activities connected with cryptocurrencies in India.

Highlighting their “serious concern” over the growing popularity of alternative digital payment systems that completely lack government oversight, the IMC stressed that privately generated cryptocurrencies “lack all the attributes of a currency,” carry no “intrinsic value” and therefore can be detrimental to India’s economy.

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To stamp out crypto mining and trading, the panel in their draft 'Banning of Cryptocurrency & Regulation of Official Digital Currency Bill' suggested imposing a jail term of up to 10 years and/or a penalty of up to $7.25 million against any person who “directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency.”

These cryptocurrencies cannot serve the purpose of a currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency, hence private cryptocurrencies cannot replace fiat currencies.

The need to produce clear guidance on cryptocurrencies became acute last April when the Reserve Bank of India (RBI) issued a notice banning financial institutions from participating in virtual currency transactions. In July 2018, the Supreme Court of India endorsed the ban, pending further review.

Before the government decides on the fate of cryptocurrencies in India, the IMC report and the draft legislation will be reviewed by all relevant departments and regulatory authorities.

“Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services,” Subhash Chandra Garg, Economic Affairs Secretary said in a tweet. “It also opens up door for a possible official digital rupee. Private crypto currencies are of no real value. Rightly banned.”

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