It could soon be illegal in the world’s largest democracy to hold cryptocurrencies that lack the government’s seal of approval.
According to Moneycontrol, a report which is being prepared by a committee headed by India’s Economic Affairs Secretary, Subhash Chandra Garg, may propose amendments to the existing laws with a view of making it illegal to hold crypto assets that are not approved by the government.
Per the reports from the Indian financial publication, the Subhash Garg-committee is in the final phase of deliberations. Besides merely proposing legislative amendments and recommending punishment for those holding unapproved crypto assets, the panel will also define the punitive measures that will be meted on those who flout the law.
It is understood that this move stems from the government’s view that crypto assets which are unregulated should be kept out of the Indian financial ecosystem to prevent them from being used to aid illegalities such as evading taxes as well as in Ponzi and multi-level marketing schemes.
The Subhash Garg-committee was set up last year and is expected to submit its report in December. Besides the Economic Affairs Secretary, the membership of the committee is drawn from India’s central bank and the country’s securities markets regulator.
If the Subhash Garg-panel report is adopted as reported it will not be a surprise given the anti-cryptocurrency stance the various government agencies in India have taken. Early in April, for instance, the Reserve Bank of India (RBI) prohibited financial institutions that the central bank of the world’s second-most populous country regulates from offering services to crypto businesses. Additionally, the RBI banned these financial institutions from allowing their clients to buy cryptocurrencies.
“…with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs [Virtual Currencies],” read part of a statement issued by the RBI as reported by CCN. “Regulated entities which already provide such services shall exit the relationship within a specified time.”
Trail of Devastation
Months after the ban the devastating repercussions continue to be felt in India. In September one of the biggest cryptocurrency exchanges in the world’s sixth-largest economy by nominal GDP, Zebpay, announced that it was shutting down after it found itself unable to operate without access to banking services.
The negative consequences of the ban have not been limited to cryptocurrency exchanges, however, and have spread to the wider blockchain ecosystem. As CCN reported last month, this was leading to a ‘blockchain brain drain’ as well as ‘blockchain capital flight’ to jurisdictions with more conducive environments such as Malta, Estonia, Switzerland and Thailand.