The Indian government has reportedly proposed to ban the use of cryptocurrencies for payments and to set a deadline for investors to declare their cryptocurrency holdings. Violators can be arrested without a warrant and held without bond. Additionally, the crypto invoice may require a uniform know-your-customer (KYC) process for all crypto exchanges.
Proposed Rules in the Indian Encryption Bill
As a cryptocurrency bill waits to be discussed in parliament in India, several reports have emerged about what the bill contains, which the government has not made public.
While crypto assets will reportedly be regulated, the Indian government plans to ban the use of cryptocurrencies for payments, Reuters reported Tuesday, citing an unidentified source and a summary of the bill it has seen.
The proposed legislation also states that the rules will be “recognizable.” Violators can be arrested without a warrant and held without bail, the news outlet detailed, citing the bill’s summary:
The Indian government is planning a ‘blanket ban on all activities of any individual in mining, generating, holding, selling, (or) trading’ in digital currencies as a ‘medium of exchange, store of value and a unit of account’ .
While cryptocurrency will not be legal tender in India, as it is in El Salvador, the proposed cryptocurrency legislation will give it legal status.
According to the source, self-care wallets are likely to be banned. However, this can prove difficult, as explained by the CEO of a major cryptocurrency exchange in India. You recently outlined what you expect in regards to self-care wallets and new crypto legislation.
The Indian government also plans to set a deadline to allow investors to declare their cryptocurrencies and comply with the new rules, Bloomberg reported Tuesday, citing people familiar with the matter.
Additionally, The Economic Times reported on Wednesday that proposed cryptocurrency legislation will require crypto exchanges to share their Know Your Customer (KYC) data with regulators and government agencies, including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the income tax department.
The crypto bill will also require a uniform KYC process for all crypto exchanges, the news outlet added, noting that exchange platforms currently have their own procedures.
Regarding taxes on cryptocurrencies, the government plans to add the cryptocurrency to Section 26A of the Income Tax Act in the next budget, the post conveyed, noting that this will “require taxpayers to disclose their cryptocurrency investments both in India as well as abroad. “
Last week, NDTV reported that it had seen the government cabinet note naming SEBI as the regulator overseeing crypto activities in the country. Additionally, India’s Finance Minister Nirmala Sitharaman confirmed last week that the crypto bill has been reworked from its original version, which seeks to ban all cryptocurrencies, including bitcoin and ether. He also answered several parliamentary questions regarding the proposed regulation on cryptocurrencies.
What do you think about the cryptocurrency regulation that India has supposedly proposed? Let us know in the comment section.
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