A high government panel has drafted a bill recommending the ban on virtual currencies of India. The top name in the cryptocurrency list includes Bitcoin and Ripple as these are not under the control of the government.
On 23rd July 2019, the committee presented a report along with the proposed draft bill titled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.
Although, it’s not a sudden move as the discussion began last year April 2018. “The writing was on the wall regarding cryptocurrencies since April last year, when the Reserve Bank of India (RBI) barred banks and financial institutions from dealing with cryptocurrencies. That was just the trailer, this report and draft bill have crystallised this matter now.
If this proposal is approved, India will join the countries which have banned cryptocurrencies,” said Nirav Maniar from International Business Advisors (IBA), an accounting, tax and legal advisory firm.
Well, the committee is in favour of launching an official digital currency. “As virtual currency and its underlying technology is still evolving, the group has proposed that the government may establish a standing committee to revisit the issues addressed in the report as and when required,” it said.
We will also inform you in advance that the ban on cryptocurrency will come along with imprisonment up to 10 years and fine of Rs. 25 Crore. This will be applied for all those companies or an individual as well who are involved in any of the activity related to the cryptocurrency. So, if you have also forgotten some crypto units in your account then you might be in trouble. We will suggest you the solutions and tell you that what this new upcoming law entails.
Impact of the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill
There will be several implications on India and the cryptocurrency traders in India.
Naimish Sanghvi, Founder, CoincrunchIndia.com, a crypto blog, said, “Technology changes every day. If you see the draft, it’s dated February 2019 and was published only in July. But from the time it was drafted until today, the virtual currency world has undergone several changes.
Japan has regulated cryptocurrencies. In G20, it was declared as no big threat. A draft and eventual law like this will simply lead to brain drain to more favourable countries.”
India’s biggest exchange Zebpay moved out to Malta in October 2019 due to the lack of strict rules and regulations and many more companies can also repeat this activity. Shanghvi said, “Most exchanges have entities outside, they only have a base in India.”
The startups have especially faced a hit due to the bill. “The sad part is for startups who have been in technological solutions, especially around cryptocurrencies. For them, this move is a setback,” said Maniar. Even venture capitalists (VCs) and angel investors who have backed crypto startups will be affected.
“In an unfavourable environment, startups will simply pack up and go to other countries where it is easier to do such business. The Indian government in such a case loses revenue,” said Vishal Gupta, CEO, Postgram.com, a social media site, and crypto influencer.
This move will definitely throw the cryptocurrencies into a darker phase. Gupta said, “It’s really a bad idea for the government to ban cryptocurrency in India because it will drive transactions underground. This will result in a huge black economy. Instead of banning, they should have made virtual cryptocurrencies legal and have strict regulations.”
According to the experts, the crypto transactions will not stop. Gupta said, “Transactions are completely online, it’s impossible to tell where they are happening from. In the cryptocurrency world, data, internet and millions and millions of servers are involved.”
As RBI banned banks to deal with individuals or businesses dealing with crypto, many individuals have moved such assets out of India, already, said experts. Since the money is no longer in the regulatory system, the transactions can’t be traced, they added.
What should be done? Do nothing but take a smart decision
After presenting a bill Government has clarified that no blanket ban has been put on cryptocurrencies yet. “If this bill is passed, holding, selling and trading will become a criminal activity. This document cannot be claimed as the final. There will have to be a provision for an exit plan to ‘declare’ and ‘dispose’ the cryptocurrencies which are currently being held,” said Shanghvi.
Does it mean that we don’t need to get rid of the cryptocurrencies now? Sanghvi said, “Don’t do anything as a reaction to this move. It is just a draft bill, and when the law changes, you will do what you have to do.”
Being a participant of the cryptocurrency world, it’s up to you that whether you hold or sell your crypto units. But we will suggest you take an informed and smart decision by measuring all the risks. Including this, doing a new crypto investment will not be a smart decision because there are many risks involved and many clarities are still lagging on the legal front.
A crypto speaker spoke to Mint and said that if someone needs to liquidate crypto holdings, the person can do so through another person based in another country. Many individuals trade through family or friends in other countries.
Meanwhile, the world of cryptocurrencies will remain ever-changing. Prathibha Bangera, a lawyer at Mumbai-based law firm Toprite Juris, said, “The Constitution of India Article 19(1)(g) gives us the fundamental right of freedom to conduct business in any sector or trade.”
If this angle is pursued by crypto startups and investors, things might get more interesting. Gupta concluded, “At a global level, the industry will keep on growing, innovation will keep on happening, and India will lose out its edge, if after five years they decide to make cryptocurrencies legal, it would be too late, and they will simply end up playing catch up.” Well, it’s just a drafted bill and implemented only when it will be passed. But take it as an important reminder or information and make your decision accordingly, so that in future you will not get in any trouble.
Content Source: https://t.ly/bm9Z
