New Delhi: A recent draft bill that proposes jail term for anyone who deals in cryptocurrencies continues to cause a stir in India and the cryptocurrency market around the world.
Bloomberg’s report on 7 June, which mentioned the jail term, followed an earlier 26 April report by the Economic Times, which talked about the ‘Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019’ draft being “circulated to relevant government departments”.
However, according to a Right to Information (RTI) request filed on 4 June 4 by Varun Sethi, a lawyer specializing in blockchain, the Reserve Bank of India says it is not in the know of the proposed ban. RBI, however, has not encouraged the use of bitcoins, and the sale of bitcoins currently is taxed in India. There are an estimated 30 lakh bitcoins in circulation in the country.
Regardless, cryptocurrency experts believe that fretting over the draft at this stage may not help. “It’s premature to come to a conclusion on this,” said Vishal Gupta, CEO of many crypto-based startups like SearchTrade, BINEX and more, citing the fact that this is a private bill at the moment. Gupta also said that while a section of the bill has been talked about, it actually says that “illegal dealings” with cryptocurrencies will be illegal, which is the same as saying paying rupees for illegal activities will be illegal.
Further, Sathvik Vishwanath, CEO and co-founder of Unocoin, said he doesn’t think the bill would be able to stop dealings in cryptocurrency even if it does come into effect. “Transactions are completely online,” he said, “It’s impossible to tell where it’s happening.”
Vishwanath also believes it would be a bad option for the government to ban cryptocurrency in India, because it might lead more people towards underground transactions. He said that as long as there is a way to bring this money into regulated means, there is a way to trace it and stop illegal activities. He also noted that when the RBI’s notice on cryptocurrency came into effect earlier, a lot of people moved their cryptocurrencies out of the country.
This seems to be an important point. Ashish Singh, CEO of bZird, a digital marketing firm, said many cryptocurrency users in India keep their money abroad. Singh, who is part of cryptocurrency groups on WhatsApp, and has dealt in these himself, said the bill may not hurt the really big users.
According to him, many Indian users don’t actually hold cryptocurrency accounts in their name. Instead, they have friends in other countries who buy and sell currency for them, and send them money through modes like PayPal etc. This makes it easier for them.
A user on a cryptocurrency WhatsApp group called Crypto Tech Stories wrote, “So, as of now, if we want to get withdrawal, need to get it from someone in the US or other countries.”
“Honestly, I don’t think the government will go this way. India is part of the G20, and countries in that grouping have worked hard to regulate such currencies,” said a person who ran a cryptocurrency company in India but had to shut it down. Given the sensitivity of the matter, he requested not to be named.