The crypto community was sent into a spin this past week as the news broke that a bill had been proposed in India banning all cryptocurrencies including Bitcoin, with users potentially facing a 10-year jail sentence if found to be partaking in the industry.
The “Banning of Cryptocurrency and Regulation of Official Draft 2019”, proposed the imprisonment of those who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies”. It also put forward the idea of India developing its own cryptocurrency.
The bill made various crypto commentators and leading figures to criticize the Indian government and the country’s economic affairs secretary Subhash Chandra Garg who has led the drafting.
John MacAfee led the charge in denouncing the proposed bill saying “the war has begun” and called on Anonymous and others to stand up against the Indian government. Binance’s CEO, Changpeng Zhao, said the bill would be a “push” for privacy coins like Monero in the nation.
However, it appears that many have jumped the gun, and an Indian crypto ban is not anywhere in the government’s agenda.
The Reserve Bank of India denies involvement
Firstly, the Reserve Bank of India (RBI), the country’s central bank, has denied any involvement in the bill and has not been consulted about it. Not only that, but, it has also not received any written communication that a government department is contemplating such a move.
This seems interesting since the Reserve Bank wields considerable power. According to local news reports, a government official said: “a decision on the launch of Digital Rupee would be taken after consulting the Reserve Bank of India (RBI).” So it would be absurd to think that a ban on cryptocurrencies would be undertaken without the approval of the Reserve Bank or at the very least a consultation. The proposed Indian cryptocurrency was also played down by the Reserve Bank earlier this year, showing further the disjointedness of this bill.
The Reserve Bank has been cautious towards cryptocurrencies and looked to enforce strict regulations. But, interestingly, it has never outwardly denounced them. In January of this year, the Financial Stability Board (FSB), which has 20 countries in its group, including India, said that cryptocurrencies are not a threat. This advice must hold weight for the Reserve Bank as it quoted them in a report it released at the time.
The report read:
” The FSB has undertaken a review of the financial stability risks posed by the rapid growth of crypto-assets. Its initial assessment is that crypto-assets do not pose risks to global financial stability currently.”
It is just a proposed bill, nothing concrete
Fortunately, the bill is merely a proposal, and if it were to come about, it would have to pass through the two legislative houses of the Parliament of India, the Lok Sabha and the Rajya Sabha. With the huge monetary power of the crypto sphere, it is not hard to see various lobbyists and campaigners swaying the votes of politicians in the nation.
As many will know, the legislative process is a long, tedious, and it could take months or years to pass and be put into law. That is a lot of time in the crypto space and circumstances could certainly change in the future.
The bill, if passed, will also face the Indian Supreme court. The Indian banking ban on cryptocurrency-focused firms is set to be heard on July 23rd of this year, and this result could have serious implications for the outcome of this proposed bill.
Although it does appear rather bleak for the crypto community in India, there are no reasons to be too alarmed at the prospect of this bill. There are still many hurdles that need to be crossed, and a lot of time will pass before anything concrete is decided. Just look at China and its numerous reported banning of Bitcoin, this saga will no doubt continue for a long time. Let’s keep fingers crossed that the bill remains to be a proposal.