A draft legislation set to pass into law the existing ban on cryptocurrency in India is currently in the works, reports ET Tech. The Bill is said to be titled, “The Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill, 2019”. The draft of the legislation is planned to be released at the end of May.
Cryptocurrencies stand currently banned in India due to an effective ban imposed by the RBI in April of 2018. The notification prevented all entities regulated by the RBI from handling or enabling the usage of cryptocurrencies in India. Within a couple of months, the Supreme Court upheld the ban, refusing to grant any interim relief to petitioners complaining about frozen funds due to being unable to trade their assets in cryptocurrencies.
Inter-Departmental Approval of a Bill to Ban
The draft legislation currently under discussion is reported to formalise this ban through central legislation. The move has seen support from a number of government agencies, including the Department of Economic Affairs (DEA), the Central Board of Direct Taxes (CBDT), and Central Board of Indirect Taxes and Customs (CBIC). A committee of these agencies along with the Investor Education and Protection Fund Authority was of the view that there is “an urgent need to ban sale purchase and issuance of cryptocurrency”. The committee is also considering a ban under the Prevention of Money Laundering Act, as the use of cryptocurrency in money laundering forms the basis of the ban.
Finance Ministry report hints at a comprehensive policy
Meanwhile, the Ministry of Finance has dropped a hint with regard to there indeed being a comprehensive legislation on the cards. The Summary of Activities 2018 Report gives the following insight on the activities on the Department of Economic Affairs with respect to the issue:
14.5 Policy and Regulation of Crypto Assets in India: An Inter-Ministerial Committee under the Chairmanship of Secretary, Department of Economic Affairs with representatives from concerned Departments has been constituted for considering all aspects related to Virtual Currencies and Crypto Assets. Various options for treating Virtual Currencies and Crypto Assets including banning/ regulating are being examined by the Committee.
The Report does not go into any detail regarding what kind of path such legislation or policy may take.
Supreme Court waiting for Govt policy
In parallel, the Supreme Court is also waiting on the Government to come out with a policy on how to regulate cryptocurrency in India. Failing this, the Court will take its own decision on the petitions before it contesting the ban currently in place from the RBI. The next hearing for the matter is posted on July 23.