According to a Bloomberg article citing people familiar with the situation, the central government is considering giving Indian cryptocurrency holders a deadline to declare holdings and comply with upcoming new restrictions. Given that cryptocurrencies can potentially be classed as a financial asset, SEBI (Securities and Exchange Board of India) would apparently be enlisted to oversee and regulate them.
According to a recently circulated cabinet note, the word ‘crypto assets’ would be used instead of cryptocurrencies, with a clear distinction made between them and the government’s and RBI’s digital currency plans (Central Bank Digital Currency, or CBDC) that will be piloted early next year.
According to Bloomberg, any infraction will result in a fine of Rs 20 crore (about $2.7 million) or a sentence of 1.5 years in prison, according to the plans. In addition, establishing a minimum threshold or limit for investing in crypto assets in order to protect small investors is in the works.
While the government and many prominent industrialists, such as Mukesh Ambani, are extremely bullish on cryptocurrency’s underlying technology, blockchain, the finance minister clarified that the government has no active plans to expand the cryptocurrency space in the country, in addition to refusing to recognise it as legal tender.
According to a research by Chainalysis, the Indian cryptocurrency market would have grown by over 641 percent by 2021. The Indian crypto industry is a lively and blooming ecosystem, with the country ranking seventh in the world for ‘crypto-awareness’ and second in terms of the number of cryptocurrency owners out of 154 nations according to Chainalysis’ 2021 Global Crypto Adoption Index released in August this year.
For a long time, the Union government has emphasised the dangers of unregulated cryptocurrency, which include terror funding and other issues. The administration is currently rewriting an earlier measure that advocated banning all private cryptocurrencies in order to incorporate new viewpoints, after which it will be presented to parliament. Gains on transactions involving these virtual currencies will be taxed as well.