India: Complete ban on all private cryptocurrencies and time for asset withdrawal
The government has yet to give a clear definition of a private cryptocurrency
It is reported that the Indian government will pass a bill to ban all private cryptocurrencies at the winter session of the Lok Sabha (lower house of the Indian parliament), which starts on November 29. Shortly after the information on the proposed bill emerged, a huge amount of panic selling led to the collapse of WazirX, the largest cryptocurrency exchange in India.
The Indian government regularly warns citizens about the dangers of investing in cryptocurrencies. In addition, the International Monetary Fund (IMF) said that since crypto assets can disrupt various aspects of the global financial system, they should be monitored closely.
The bill on cryptocurrency and the regulation of the official digital currency will be submitted to the Lok Sabha. If accepted, only private cryptocurrencies such as Monero, Dash, Zcash, and so on can be banned.
The government has yet to clearly define a private cryptocurrency. Therefore, it is not yet clear whether investors will be able to continue trading bitcoin, ether and other popular cryptocurrencies. According to the Lok Sabha document, the government will make certain exceptions to promote the technology behind the cryptocurrency and its use. India also seeks to “create a favorable basis for the creation of an official digital currency to be issued by the Reserve Bank of India.”
At the beginning of the year, it was reported that if the new law is adopted, cryptocurrency investors will be given a transition period from three to six months after the new law enters into force to liquidate their investments.
In an interview with CNBC, Avinash Shekhar, CEO of the Zebpay crypto exchange, said that the Indian government might not go for an outright ban on cryptocurrencies, instead implementing strict rules that could discourage their use.
Earlier, a document appeared on the Web stating that the government wants to introduce a law prohibiting the use of all private cryptocurrencies within the country. Voting is to take place at the winter session of the Lok Sabha (lower house of the Indian parliament), which starts on November 29.
“About two weeks ago we met with the finance committee of the parliament. The message we got from the government is that they are looking for some kind of regulation – strict regulation, but not a complete ban. ” – Avinash Shekhar
According to Shekhar, the Indian government fears that some private cryptocurrency, such as bitcoin, could emerge and be used as a rival currency with the rupee. Unlike the rupee, which is controlled by the government, the cryptocurrency will be out of control and more volatile, which can lead to people losing money.
Instead of an outright ban, holders of Indian cryptocurrencies may be allowed to trade cryptocurrencies, but they may face heavy taxes that ultimately discourage their use.
While India and other countries seek to stifle private cryptocurrencies, they are being accepted by other countries such as El Salvador and Palau.
