The National Association of Software and Services Companies (Nasscom ), a trade association of Indian IT and BPO industry and other stakeholders have taken strong exception to the Indian government’s move to ban cryptocurrencies in the country, stating that banning is not a solution to the issue.
An high-level Inter-Ministerial Committee, constituted by the Central government in November 2017 to study the issues, had recently come out with a draft bill titled ‘Draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019’ which proposed fine or imprisonment up to 10 years or both for mining, holding, selling, issuing or using cryptocurrency.
Opposing the proposed bill, the industry body stated that the recent proposal of the Inter-ministerial Committee of the government to ban all cryptocurrencies barring those that are backed by the government is not the most constructive measure. “Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens,” it said.
The proposed draft bill will make it illegal to deal in any cryptocurrency in India, which is not
regulated by the government. That will include currencies such as Bitcoin, Ethereum, Ripple and more.
Nasscom though is not the only organisation that has taken this view. Other stakeholders in the
industry have said that the bill may not be able to stop crypto usage in India. They argue that the
online nature of crypto transactions makes it impossible to tell where it is happening from. Enforcing such a bill would be a bad idea for the government, since it might drive crypto transactions underground. As long as there’s a way to bring this money into regulated means, there’s a way to trace it and stop illegal activities, they argued.
The bill also proposes fine or imprisonment up to seven years or both for issuing any advertisement, soliciting, assisting or inducing participation in use. It also proposes fine for acquiring, storing or disposing of cryptocurrency with intent to use. The proposed Bill provides that cryptocurrency should not be used as legal tender or currency in India. It prohibits mining, buying, holding, selling, dealing in, issuance, disposal or use of cryptocurrency
in the country. In particular, the Bill prohibits the use of cryptocurrency for: (i) use as a medium
of exchange, store of value or unit of account, (ii) use as a payment system, (iii) providing services such as registering, trading, selling or clearing of cryptocurrency to individuals, (iv) trading it with other currencies, (v) issuing financial products related to it, (vi) using it as a basis of credit, (vii) issuing it as a means of raising funds and (viii) issuing it as a means for investment.
However, the Bill allows for use of technology or processes underlying cryptocurrency for the purpose of experiment, research or teaching.