India to Ban Cryptocurrency Use as Payment Solution

According to a report on Tuesday, the government of India has proposed the outright ban of cryptocurrency use as a payments solution and set a deadline for local investors to declare their holdings or face severe penalties, including jail time without warrant or bail.

Additionally, the new cryptocurrency bill could mandate a uniform know-your-customer (KYC) registration process for all crypto exchanges. However, the government has not yet made the contents of the bill public.

The report clarified that while the use of crypto for payments will no longer be attainable, crypto trading/investing activities will remain but will become more regulated. As such, the proposed crypto bill will give cryptocurrency legal status in the Asian nation.

Reuters also revealed that the proposed legislation noted that the rules will be “cognizable.” The bill detailed that:

“The Indian government is planning a ‘general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing’ in digital currencies as a ‘medium of exchange, store of value and a unit of account.’”

Reuters added that its source revealed self-custodial wallets will likely get banned if the bill passes. However, the CEO of a top cryptocurrency exchange in India has asserted that this may prove difficult, given the nature of the sector.

All Crypto Activities to be Overseen by the Securities and Exchange Board of India

As mentioned earlier, The Economic Times reported on Wednesday that the proposed bill would mandate crypto exchanges to adhere to a know-your-customer (KYC) template and share data with regulatory agencies, including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the income tax department.

On cryptocurrency taxation, the report revealed that the Indian government could add crypto to Section 26A of the Income Tax Act in its upcoming budget, asserting that the act will “necessitate taxpayers to reveal their cryptocurrency investments both in India and abroad.”

Last week, Indian-based news network NDTV announced that it took a peek at the government’s cabinet note, which recommended the SEBI to oversee cryptocurrency activities in the Asian nation.

Additionally, Indian Finance Minister Nirmala Sitharaman revealed last week that the original crypto bill, which sought to ban all crypto activities in India, failed to scale and got reworked. The minister also responded to many inquiries about the proposed cryptocurrency regulation.

 

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