Exit window expected for crypto holders, old transactions to be under observation
In March 2020, the Supreme Court hit down RBI’s ban on cryptos, labelling its circular unauthorized.
The projected legislation on cryptocurrencies that is likely to ban digital currencies — apart from the one being mooted by the Reserve Bank of India (RBI) — is predictable to deliver an exit window to the existing crypto holders of private entities.
Indians are supposed to hold about US $ 1.5 billion (around Rs 10,000 crore) in cryptocurrencies, as per unofficial estimates.
An option to deliver an exit period to 3-6 months before the prohibition of the trading, mining and issuing of cryptos has been discussed in inters- ministerial debates. A final draft of the bill is however to be taken to cabinet a source told.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, purposes to ban all private cryptocurrencies. It lays the supervisory framework for the launch of an “official digital currency” that was set to be introduced in Parliament during the Budget session but was not engaged up.
A high-powered inter-ministerial group has also previously suggested the banning of all private cryptocurrencies.
In April 2018, the RBI barred banks and other structured entities from supporting crypto transactions after digital currencies were used for scams.
In March 2020, the Supreme Court hit down the RBI’s ban on crypto, labelling it's circular unconstitutional. One of the SC’s motives for upsetting the ban is that cryptocurrencies are unregulated but not illegal in India.
As per an official source, the planned law will be potential, even though statements of holdings and transactions may be sought to look back. The government is likely to provide an exit window to existing crypto holders in the occasion of an outright ban, stated a government official.
On the other hand, the RBI has specified that it’s “very much in the game” and is ready to launch its digital currency.
CBW - External Analyst