India to regulate crypto and not move for an outright ban: Cabinet documents
A Cabinet note circulated by the Indian government on the proposed cryptocurrency bill has suggested regulation of private cryptocurrency rather than banning it.
According to the report, crypto will not be recognized as legal currency in India instead the legislation describes Cryptocurrency as Cryptoasset.
Cryptoassets will be dealt with the existing crypto exchange platforms which will be regulated by the Securities and Exchange Board of India (SEBI). A cut-off date will be prescribed for those having cryptoassets to declare the same and bring under the Indian crypto exchange platforms - which will be regulated by the market regulator.
The proposed CBDC by the Reserve Bank of India (RBI) has not been clubbed with the new crypto bill. However, the central bank will regulate issues related to cryptocurrency.
The note further reads that all those found violating the exchange provisions will be penalized with criminal imprisonment of up to one and a half years. Penalties in the range of ₹ 5 crore to ₹ 20 crore may also be levied by the regulator. As a deterrent for those found using these assets for terror-related activities, the provisions of the Prevention of Money Laundering Act (PMLA) will apply with suitable amendments.
Earlier this week, Finance Minister Nirmala Sitharaman said the risk of cryptocurrency going in the wrong hands is being monitored. The minister also stated that there is no decision to stop advertisements of digital currencies.
Sitharaman added that the government has no proposal to recognize Bitcoin as a currency in the country and that the government does not collect data on Bitcoin transactions.
The government had said that it has received a proposal from the RBI to include digital currency under the definition of a 'bank note'.