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India Contemplates Outright Prohibition on Digital Currencies

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According to a report by The Economic Times (local media outlet) on April 25, a draft bill was circulated which essentially outrights on banning cryptocurrencies which is now making rounds in various departments of the Indian government.

One of the official who is also familiar with the matter, while speaking to the Economic Times said that the government had started inter-ministerial consultation on “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” draft bill.

As per the reports, a committee involving the DEA (Department of Economic Affairs), CBDT (Central Board of Direct Taxes), CBIC (Central board of Indirect Taxes and Customs) along with IEPFA (Investor Education and Protection fund Authority) have extended support to the idea of completely prohibiting the “sale, purchase and issuance of all types of cryptocurrency.”

Reports also suggest that the committee is exploring an option to ban digital currencies under PMLA (Prevention of Money Laundering Act) as this sort of currency has the potential to be used for money laundering. Reports further note that the Ministry of Corporate Affairs stated that most of the schemes which are frauds use cryptocurrency in order to “defraud gullible investors.”

However, the report by the Economic Times run opposite to the stories from December, according to which a different government committee suggested that cryptos should be legalized in the country and also mentioned in a general sense that it is incorrect to classify cryptocurrency illegal completely.

Previously, in the month of February, The apex court of India (The Supreme Court) granted a total of four weeks to the Indian authorities in order to come ahead with cryptocurrency policies, prior to that, the court would not hear cases related to cryptocurrencies, including parties demanding to reverse the crypto circular launched by the RBI (Reserve Bank of India).

Also, in the month of February, a report was released by a panel of Indian Economic Affairs Secretary which substantially raised concerns regarding the impact of cryptocurrencies on the local fiat currencies in the case of crypto being accepted as a mode of payment in the country.

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