Excerpts from India’s “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019” has been leaked. The draft bill’s snippets show that some local media outlets may have blown its content out of proportion. A number of industry experts have also opined on the bill pointing out its flaws and inaccuracies, reports Bitcoin.com on June 12, 2019.
Per the report, Subhash Chandra Garg, India’s finance secretary revealed last week that the report for the recommended cryptocurrency regulation is ready to be submitted to the finance minister. He also added that the details of the report or draft bill have not been released to the public.
Despite not being shared, news about India’s draft bill tailored at banning cryptocurrency has been circulating after two local media stated on April 26 and June 7, 2019, respectively that the government intends to ban this asset class. The first publication from Economic Times outlined that there had been inter-ministerial consultations regarding the bill, while the second publication from Bloombergquint stated that anyone found holding or trading crypto assets will spend 10 years in prison.
However, Nikunj Ohri, the author of Bloombergquint’s article published a snippet of the supposed draft bill on Twitter. Part of the bill outlined that anyone who directly or indirectly “mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency” for the purpose of carrying out activities “mentioned in clauses (e), (g) and/or (h) of sub-section (1) of Section 8” will either be fined by the government or spend one to ten years in jail.
While the snippet corresponds with what Bloombergquint had earlier publicized, it is worthy to note that the outlawed activities which will trigger the fine or jail sentence have not been revealed. Twitter users who also took note of the incomplete information requested that Ohri reveals the entire bill in order for them to ascertain the activities that will warrant punishment from the use of cryptocurrency.
On the other hand, industry experts have opined that the activities, in this case, could be money laundering and other criminal use of virtual assets. Tanvi Ratna, a Blockchain Lead at EY, for instance, said the punishment is meant for “some specific kind of activity or intent” and it does not come as a surprise for crimes pertaining to money laundering to attract 10 years in jail. As such, the same can be said in this case.
Ratna also noted that the leaked draft bill has not defined what virtual assets are, that is if they are security token or a utility token and which aspect the law is applicable. According to her, these are sections that are of the utmost importance in any blockchain regulation. The absence of these definitions, therefore, means that the draft bill is not ready.
To that effect, conclusions have been drawn that the supposed ban of cryptocurrency in India will not be a total ban. It might only affect the use of cryptocurrencies for illegal activities such as money laundering and terrorism financing.
On the contrary, the draft bill that was released prompts a lot of questions. For starters, no one knows if it is a private or public bill. A private bill is one prepared and introduced by a member of parliament while a public bill is introduced by a minister. The latter holds more effect than the former and even if the bill is approved, anyone can still challenge its constitutional validity.
It can also be recalled that Bloombergquint’s publication also outlined that from the day the bill takes effect, people will have 90 days to declare and dispose of their cryptocurrency. On that note, Kashif Raza, co-founder of Crypto Kanoon, a blockchain and crypto regulatory news platform questioned how the government is going to enable its citizens to dispose of crypto assets when its central bank, the Reserve Bank of India (RBI) has already banned banks from rendering services to crypto exchanges. As such, it would be difficult for anyone to trade these assets for cash.
Raza also wondered if the government is going to set up government agencies that will buy crypto assets from people at the current market rate or it will approve peer to peer transactions. If it is the case of the latter, no one will want to buy an asset knowing fully well that they will not own it in 90 days.
These aside, the Reserve Bank of India which is part of the Garg panel, an inter-ministerial panel that has been tasked with drafting the regulation recently stated that it knows nothing about the draft bill.
This was after, Varun Sethi, a lawyer who specializes in the blockchain filed a Right to Information (RTI) request to the RBI on May 7, 2019. As a response, the RBI stated on June 4, 2019, that it has neither communicated with any government nor received notice from any government body in regards to the circulating draft bill. Thus, the India crypto community have advised the general public to remain calm.
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