Indian government starts inter-ministerial consultations on complete ban on cryptocurrencies: Report

The Indian government has started circulating a draft bill that, if passed, would impose a complete ban on cryptocurrencies, The Economic Times reported.

Government officials familiar with the latest development told ET that the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” is being circulated to relevant government departments. The government has also reportedly started inter-ministerial consultations on the bill.

Recently, the government had told the Supreme Court of India that the deliberations on the crypto regulatory framework were currently in the final stages. The apex court had given a four-week deadline to the government to come up with a cryptocurrency regulatory policy.

Last year, the government had set up an inter-ministerial committee, led by the Department of Economic Affairs secretary Subhash Chandra Garg, to draft a regulatory framework for cryptocurrencies. Previous reports suggested that the committee was considering introducing regulation for cryptocurrencies instead of a complete ban.

An official had told The New Indian Express late last year, “There is a general consensus that cryptocurrency cannot be dismissed as completely illegal.”

However, the perspectives of the officials now appear to have changed significantly. An official told ET that various government departments including the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA) are backing the idea to impose a complete ban on the “sale, purchase and issuance of all types of cryptocurrency.”

Noting the potential of cryptocurrencies to be used for money laundering purposes, the committee said that a complete ban could be achieved under the Prevention of Money Laundering Act (PMLA).

In its feedback to the DEA, the Ministry of Corporate Affairs said that as the implementation of the bill could take time, individuals defrauding investors and laundering money using cryptocurrencies should be prosecuted under the PMLA.

On the basis of the feedback received during consultations, a final law will be proposed to the government that will take charge after May elections.