A senior government official told Reuters that a bill, banning the use and even possession of cryptocurrencies, is planned to be considered by the Indian Parliament. Violators face heavy fines.
The project assumes responsibility for the ownership, release, production, trade, and transfer of any assets in cryptocurrency. According to the official, owners and holders of cryptocurrencies will be given 6 months to liquidate the balances, and after that, fines will begin. His name remained hidden due to the fact that the bill has not yet been made public.
The bill fits into the agenda of the January session of the parliament, which is generally directed against private virtual currencies in order to lay the foundation for its own electronic currency. At the same time, some investors do not lose hope that the Indian currency will be organically integrated into the system of virtual currencies without strict prohibitions.
Still, it is highly likely that the law will be approved, since Prime Minister Narendra Modi has a majority in the legislature.
If the project does come into force, India will become the first major state to outlaw cryptocurrencies. Even China has not yet taken such measures.
Bitcoin immediately reacted to such news with a drop in the exchange rate.
On Saturday, having marked a record high for itself, the cryptocurrency began to move down. At the beginning of the session, it was trading at $58,956. 90. Now, its price does not exceed $55,350.
Masafumi Yamamoto, chief currency strategist at Mizuho Securities, says that investors can no longer invest in bitcoin.
Justin d'Anethan, sales manager of digital asset company Diginex in Hong Kong, called cryptocurrencies a heavy derivative, which means that getting rid of such a financial instrument is sometimes difficult enough.
However, Seth Melamed, chief operating officer of the Liquid cryptocurrency exchange in Tokyo, remains optimistic. He said, "The legislation of India will not be an obstacle for bitcoin, since it is decentralized. Government bans are inappropriate and will not deter it."
Sumnesh Salodkar, a crypto investor from Delhi, notes that despite the sad news, people are driven by greed, which means that measures for strict regulation may not be enough.
So far, the main crypto exchanges are showing an increase in operations despite any bans. According to CEO Gaurav Dahake, the number of new user registrations and the influx of finance on the Indian crypto exchange Bitbns has increased 30 times compared to last year. India's oldest exchange, Unocoin, grew by 20,000 users in 2 months of 2021, despite rumors of a law-breaking move. ZebPay only in February conducted operations for the same amount as for the entire 2020.
While conservative-minded officials of previous convocations are wary of digital currencies, calling them a "Ponzi scheme" (a pyramid scheme), progressive officials talk about the government's openness to new ideas.
Finance Minister Nirmala Sitharaman recently said in an interview: "I'll give you a hint. We do not close our minds and continue to explore ways in which we can conduct experiments in the field of cryptocurrencies."
However, an anonymous official says that digital currencies will still be banned, despite the fact that the blockchain technology itself will remain open. "There is no harm from this technology," he said.
Back in 2019, the commission recommended not limiting itself to fines, but introducing imprisonment for violators for up to 10 years, depending on the severity of the crime.
The source did not mention such a form of liability as restriction of freedom.
It should be noted that India remains one of the most closed countries for cryptocurrencies. In 2020, the Supreme Court of India overturned the Central Bank's 2018 ruling banning cryptocurrency payments, and the market has been gaining momentum ever since.
In this regard, the Reserve Bank expressed concerns last month about the growth in the number and volume of transactions in digital currencies, calling them a threat to the economy.
In general, Indian traders say that if the ban takes effect, they will comply. But until then, the pace of trade will not be reduced.
The indices of the Indian stock exchange also closed down by an average of 1%, and the Beijing market shows an even greater decline. Overall, the Asian market closed in mixed directions.