- The draft bill also shows that India will not recognize bitcoin as legal tender but rather as an asset
- According to the bill, private wallets might be banned and users would need to trade on SEBI-regulated exchanges which would be subject to monitoring
India does not plan to outright ban crypto, as a draft cabinet bill obtained by NDTV shows. Instead, the country will regulate the currency. The draft bill also states that India will not recognize bitcoin as legal tender but rather categorize it as an asset.
According to reports, the bill also notes that traders will be required to move their assets to a wallet at an exchange regulated by the Securities and Exchange Board of India (SEBI) where it would be subject to monitoring for tax compliance and anti-money laundering concerns. Keeping assets on foreign exchanges or self-custodying would be prohibited.
In addition, the bill directs the Central Bank of India to update the Prevention of Money Laundering Act to account for crypto. It also outlines the fines for non-compliance, which begin at $600,000 or 5 million rupees (₹5 crore).
The draft cabinet bill obtained by NDTV wraps up a year-long saga that began in March when initial reports emerged that the government was considering a crypto ban.
The reports of a potential ban caused mass panic selling on local exchanges. On WazirX, an Indian exchange, bitcoin traded at a 15% discount at one point before recovering.
India’s contradictory crytpo stance
Crypto bans in India aren’t exactly new. In 2018 authorities ordered a nationwide ban on digital assets trading. However, the ban was overturned in 2020 by the Supreme Court, triggering the need for Parliament to draft a bill which resulted in confusing government messages around banning vs. regulating crypto.
“From our side, we are very clear that we are not shutting all options. We will allow certain windows for people to do experiments on the blockchain, bitcoins or cryptocurrency,” Finance Minister Nirmala Sitharaman said in March in an interview with Crypto India. “We are not going to shut it off.”
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