Government departments discuss draft bill to ban cryptocurrencies
NEW DELHI: The government has kicked off inter-ministerial consultations on a draft bill to ban cryptocurrencies and regulate official digital currencies.
The “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019″ draft has been circulated to relevant government departments, a government officials aware of details told ET.
The government had formed a panel under finance secretary Subhash Chandra Garg to draft regulations for cryptocurrencies last year.
A number of government departments including the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA) have endorsed the idea of a complete ban on the “sale, purchase and issuance of all types of cryptocurrency” according to a government officials who did not wish to be named.
Based on the feedback, a final law will be proposed to the next government that takes charge after elections at the end of May.
A committee including representatives of the DEA, CBDT, CBIC and the IEPFA was “of the view that already there is a lot of delay in taking action against cryptocurrency.
There is an urgent need to ban sale purchase and issuance of cryptocurrency” according to minutes of the meeting reviewed by ET.
The committee also observed that since cryptocurrency could be used for money laundering, a ban could also be achieved under the Prevention of Money Laundering Act (PMLA).
The ministry of corporate affairs has in its feedback to the department of economic affairs pointed out the sale purchase and issuance of cryptocurrencies such as Bitcoin, Ethereum & CashCoin etc. are being done by individuals and companies on false inducements of massive returns.
Such schemes are neither transparent, nor do they fall within any regulated legal framework. Many of them are run as ponzi schemes, it said adding that these schemes were being used to “defraud gullible investors”.
The ministry also recommended that as the bill may take time to be implemented, therefore, individuals using cryptocurrencies to defraud investors and launder money be prosecuted under the Prevention of Money laundering Act till a detailed bill is brought.
By Karunjit Singh