The Reserve Bank of India (RBI) has denied knowledge of a proposed bill which would see Bitcoin and crypto ownership in India made entirely illegal. Reports surfaced last week that lawmakers in India were working on legislation that could carry a 10-year prison sentence for anyone caught holding cryptocurrency.
Amid these reports, the RBI has responded to a Right to Information request filed on June 4 by a lawyer specializing in blockchain matters. The bank states that it was not in communication with governmental agencies during the legislative process and had not received a copy of the bill.
Bitcoin and blockchain regulation in India has had a rocky ride with threats of bans being interspersed with different governmental initiatives, as well as a regulatory sandbox from the RBI.
Although the RBI denies knowledge or involvement in the bill, it does not necessitate that the reports are untrue. However, it is worth noting the high level of participation from the RBI in previous crypto matters.
Harsh anti-crypto bill
The proposed bill outlines harsh punishment for those involved in any way with cryptocurrencies. The Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, says offenders would be subject to “non-bailable” sentences, according to the draft bill sourced by BloombergQuint.
It also adds that the degree of punishment would be appropriate to the user’s cryptocurrency portfolio. The harsh nature continues when the bill states fines levied by the courts would be three times as much as the profit the individual made from crypto in the first place.
“The penalty imposed on the accused, according to the bill, shall be either thrice the loss caused to the system, or three-fold the gains made by him/her, whichever is higher. If the loss or gain can’t be reasonably determined, the maximum fine that can be imposed may be notified by the government,” claims the bill.
The timing of this bill has also been noted against the talk of India’s plans to launch its state-backed cryptocurrency – the Digital Rupee.
RBI steers clear of crypto
In seeking more information about the proposed bill, Varun Sethi, a lawyer specializing in blockchain, filed the inquiry into the RBI’s involvement.
He was met with officials stating that the RBI was not in communication with governmental agencies during the legislative process and had not received a copy of the bill.
However, the bank forwarded several of Sethi’s questions to the Department for Economic Affairs as well as the Ministry of Finance.
The RBI has been at the forefront of much of the current regulation of crypto and blockchain in India. It was through the central bank that institutions which fell under the bank’s regulations were prohibited from processing cryptocurrency purchases in 2018.
They were also involved in some pro-blockchain regulations when, in April, they unveiled a regulatory sandbox that would allow blockchain products – excluding digital currencies – to be tested.
Not generally supported
India’s harsh view of cryptocurrencies has seen criticism laid by the likes of Tim Draper, as well as Binance CEO Changpeng Zhao.
Draper said, in April last year when rumors of a ban began, that he through banning bitcoin will be a huge mistake. Then, in response to this latest bill, Zhao has said it would see a big drive for privacy coins like ZCash and Monero.