India is looking to introduce a law to ban Bitcoin, trader will be punishable by imprisonment of up to 5 years, which could extend to 10 years with a fine

India is looking to introduce a law to ban Bitcoin and cryptocurrencies, as the government sees a legal framework as being more effective than a circular from the Reserve Bank of India (RBI) in this regard. “A note has been moved (by the finance ministry) for inter-ministerial consultations,” a senior government official told ET.

According to the India Time on June 12, the spur for the draft cabinet note was the March 4 decision of the Supreme Court to quash the April 2018 circular from the RBI that prevented banks from providing services in support of cryptocurrencies, said the official cited above.

The note will be sent to the cabinet after consultations and, subsequently, to Parliament. If it is along similar lines as an earlier proposal, the law will deal a blow to investors, exchanges and other entities dealing in virtual currencies such as bitcoin, experts said.

A high-level government panel, in July 2019, prepared a draft law providing for a ban on all forms of private cryptocurrencies. It had suggested a fine of up to Rs 25 crore and imprisonment of up to 10 years for anyone dealing in them.

At the time, the court had said: “While we have recognised… the power of RBI to take a preemptive action, we are testing in this part of the order the proportionality of such measure, for the determination of which RBI needs to show at least some semblance of any damage suffered by its regulated entities. But there is none.”

The ruling lifted a de facto ban on trading in bitcoin and other such instruments and had prompted startups to say they would revive plans to invest and expand business in India.

However, the going hasn’t been smooth, industry experts said. Several banks haven’t allowed payments for currency trades in India or overseas, in the absence of any specific communication from the RBI following the Supreme Court decision. Still, transactions have been taking place through other channels, the experts said.

The draft law prepared by the committee said any direct or indirect use of cryptocurrency will be punishable with a fine or imprisonment, which shall not be less than one year, but may extend up to 10 years.

As per the draft law, a repeat offense will be punishable by imprisonment of up to 5 years, which could extend to 10 years with a fine. The fine could be three times the loss or harm caused by the person, three times the gain made by a person, or up to Indian Rupee 25 crore (3,29 million USD).

Back in May, Bitcoin trading on Paxful India increased to $ 1.48 million. Meanwhile, the competitive exchange LocalBitcoins only saw $ 1.25 million of BTC traded. In total, about $ 2.7 million, nearly equal to the all-time high of $ 2.9 million in December 2017. Despite a spike at the end of December, however, the growth in The volume of BTC on P2P exchanges in May so far has not been comparable.

Today, India’s coronavirus infections have surged to overtake the number of recorded cases in the U.K., making it the world’s fourth-worst affected nation.

India recorded 297,535 infections by Friday, compared to the U.K.’s 292,860 tally, according to data collated by Johns Hopkins University. After burgeoning infections in May and June, India now trails only the U.S., Brazil and Russia. Impact of the by Covid-19, India now have more than 140 million lost jobs.

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