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India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class. The bill would criminalise possession, issuance, mining, trading, and transferring crypto-assets, said the official, who has direct knowledge of the plan.
The government has been planning an action against cryptocurrencies for past few months but recent comments had given some hope to investors. The official said that investors will be given a window of 6 months to liquidate their assets before a penalty is imposed on them. In India, over 7 million people are believed to have invested more than $1 billion in cryptocurrency and would be hoping for a way to get reimbursed before a law is imposed.
The official said that the plan is to ban private crypto-assets while promoting blockchain technology which forms the backbone for virtual currencies. The claims come at a time when Bitcoin has seen a fresh surge in price. World’s biggest cryptocurrency hit a record high $60,000 on Saturday, nearly doubling in value this year as its acceptance for payments has increased with support from such high-profile backers as Tesla Inc CEO Elon Musk.
"I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency," Union Finance Minister Nirmala Sitharaman told CNBC-TV18. "There will be a very calibrated position taken."
The senior official told Reuters, however, that the plan is to ban private crypto-assets while promoting blockchain - a secure database technology that is the backbone for virtual currencies but also a system that experts say could revolutionise international transactions.
"We don't have a problem with technology. There's no harm in harnessing the technology," said the official, adding the government's moves would be "calibrated" in the extent of the penalties on those who did not liquidate crypto-assets within the law's grace period.
Officials are confident of getting the bill enacted into law as Prime Minister Narendra Modi's government holds a comfortable majority in parliament. If the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal. Even China, which has banned mining and trading, does not penalise possession.