Owning bitcoin in India might soon be illegal
Bitcoin topped $61,700 on Saturday, in what was to become the new all-time high for the most popular cryptocurrency in the world. The digital coin has surged so far in 2021, fueled by an influx of cash from institutions and retail investors. Tesla is one of the companies that bet big on bitcoin, announcing a few weeks ago a massive purchase of coins. But bitcoin isn’t the only cryptocurrency out there that’s been trending up for most of late 2020 and 2021. Plenty of blockchain projects with real-world use exist, and most of them have digital tokens attached that can be minted and traded. As long as bitcoin is going up, the altcoins will follow — but the opposite is also true.
The popular crypto dropped below $55,000 in early trading on Monday, which appears to be a market correction similar to what’s been seen in previous cycles. But what’s different from other recent corrections is the news cycle that might spell some trouble ahead for traders. India, a country that’s been toying with regulating the cryptocurrency market, is looking at stricter laws that would make it illegal for a person to own any digital coins, be it bitcoin or anything else.
Sources said to be familiar with the Indian government’s plan to regulate crypto informed Reuters of the proposed bill. According to an unnamed senior government official, the Indian government plans to criminalize nearly everything related to crypto coins and private blockchains. The bill would become one of the world’s strictest policies against cryptocurrency. It would criminalize “possession, issuance, mining, trading and transferring crypto-assets,” per Reuters.
The Indian government reportedly wants to introduce its own digital currency while banning everything else. The report notes that recent comments from the government had raised hopes that authorities might go easier on the booming market. The bill would give holders of cryptocurrencies up to six months to liquidate their holdings. After that, penalties would be applied. If the bill passes, India’s regulations would be even stricter than China’s, which only bans mining and trading, not possession.
The bill might impact the prices of bitcoin and other cryptocurrencies down the road. Around 8 million Indian investors currently hold about $1.4 billion in crypto investments, according to industry estimates.
The Indian government does appreciate the blockchain technology that powers all these cryptocurrencies and crypto projects, according to recent reports. “I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” Finance Minister Nirmala Sitharaman told CNBC-TV18. “There will be a very calibrated position taken.”
From the looks of it, the Indian government is only looking at blockchain tech for powering money transactions, but not all blockchains are about finance. Aside from potentially — and briefly — impacting bitcoin valuation, these regulations might impact India’s ability to compete in the blockchain industry. Holding specific amounts of digital tokens might be needed to develop specific blockchain applications, but India’s bill might hinder that.
It’s unclear when the bill might come to a vote, although when it does, it’s expected to pass with ease. Prime Minister Narendra Modi’s government has a comfortable majority. It’s also unclear what will happen to people who hold bitcoin beyond whatever grace period the bill would allow. One thing about cryptocurrencies is that they can offer holders some anonymity, so people could find ways to hide their digital holdings.
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