Indian Govt Talks On Draft Bill To Completely Ban Cryptocurrencies

News, Regulation | April 29, 2019 By:

The government of India has stated inter-ministerial consultations on a draft bill that would impose a complete ban on cryptocurrencies and regulate official digital currencies, the Economic Times (ET) reported.

The bill, called “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019,” is being circulated to relevant government departments, a government official familiar with the matter told ET.

The bill was reportedly drafted by a committee headed by Finance Secretary, Subhash Chandra Garg. The committee included a number of government departments, such as the Department of Economic Affairs (DEA), the Central Board of Direct Taxes (CBDT), the Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA), among others. According to the source, these departments have endorsed the idea of a complete ban on the “sale, purchase and issuance of all types of cryptocurrency.”

The draft bill also suggested that until a law is passed the transactions must be banned temporarily under the Anti-Money Laundering Act (PMLA). A final law will be proposed to the next government that takes charge after elections at the end of May.

“The ministry of corporate affairs has in its feedback to the department of economic affairs pointed out the sale purchase and issuance of cryptocurrencies such as bitcoin, etherium & Cashcoin etc. are being done by individuals and companies on false inducements of massive returns,” the report said. “Such schemes are neither transparent, nor do they fall within any regulated legal framework. Many of them are run as ponzi schemes, it said adding that these schemes were being used to defraud gullible investors.”

Last week, Anurag Agarwal, the CEO of the Investor Education and Protection Fund (IEPF) Authority, said that cryptocurrency is a ponzi scheme and should be banned to protect the interest of investors.

“When it comes to investor protection, the IEPFA has to take a stand against certain things. Against ponzi schemes, we are taking a stand,” Agarwal said. “We think that cryptocurrency is a ponzi scheme and it should be banned.”

Agarwal, who is also a Joint Secretary in the corporate affairs ministry, added that the authority plans to start gathering “primary data” from persons who have put in their money in chit funds and deposit-taking schemes.