Draft legislation that would allegedly impose a ban on the use of cryptocurrencies in India is being circulated by local blockchain legal experts on social media.
An unverified document published to Scribd by tech lawyer Varun Sethi on July 15 appears to reveal a draft bill entitled “Banning of Cryptocurrency & Regulation of Official Digital Currencies.” Even if authentic, the bill will not allegedly be debated during the 2019 Monsoon session of the Indian parliament, according to one local crypto industry figure.
Running at 18 pages, the document proposes a definition of cryptocurrencies as “any information or code or number or token not being part of any Official Digital Currency, generated through cryptographic means or otherwise, providing a digital representation of value.”
The definition then further notes such currencies’ use in exchange, as a store of account or value, and includes their use in financial transactions as well as investment schemes.
The proposed bill suggests that a “Digital Rupee” — digitally issued by the country’s Reserve Bank — would be approved by the Central Government as legal tender, while all currencies satisfying the aforementioned cryptocurrency definition would be comprehensively prohibited.
The document reads:
“No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use Cryptocurrency in the territory of India.”
The proposed prohibition notably does not apply to anyone using distributed ledger technologies (DLT) or other related technologies for the purposes of experiments or research, including within educational contexts, provided that no cryptocurrencies are involved for transacting payments.
The prohibition would also not apply to the use of DLT for creating a network that delivers financial or other services, or for other means of value creation, provided that again that such activities do not involve the use of cryptocurrencies as payment.
The proposed penalty for violating the prohibition on cryptocurrencies — which expressly excludes the Digital Rupee — would be either a fine or up to ten years’ imprisonment, or both.
As recently reported, the Reserve Bank of India (RBI) is reported to be developing a blockchain platform for banking in its R&D branch. At the start of this year, it was reported that RBI had paused its plans to issue its own central bank digital currency.
Meanwhile, Facebook is alleged to have withheld from applying to RBI for approval for its forthcoming Libra token, in light of the country’s rumored consideration of a complete prohibition of cryptocurrencies and long history of crypto-adversarial actions. This June, RBI has denied it has any knowledge or involvement in the drafting of such a prohibition by the government.