India starts consultations on possible total ban of cryptos

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The Indian government has kicked off what be the end for cryptocurrencies in the country. According to a report by the Economic Times, the government has started inter-ministerial consultations on a draft bill that seeks to ban cryptos and regulate official digital currencies.

The draft bill is known as the ‘Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019.’ According to sources who asked to have their identity withheld, it has already been circulated to some government departments.

Already, some notable departments have endorsed the idea of a blanket ban on all cryptos. They include the Department of Economic Affairs, the Investor Education and Protection Fund Authority and the Central Board of Direct Taxes. The final proposals, from the above departments and others that are yet to declare their stand, will be tabled to the next government that takes charge after the May election.

However, despite already supporting the ban, representatives from these departments believe that the government should act immediately. According to sources, the government is already taking too long to act against cryptos, leaving the citizens prone to crypto scams.

The government doesn’t even have to wait for the enactment of the new law, the representatives suggested. It can just amend the ‘Prevention of Money Laundering Act’ and include a clause that bans cryptos. This is because cryptos have been known to be used to launder money, they argued.

And it’s not just government departments that are out to stamp out crypto in India. The country’s Ministry of Corporate Affairs believes that fraudulent individuals are using cryptos to prey on the masses. The scammers use cryptos such as Bitcoin Core (BTC), Ether and Cashcoin to induce people with promises of lucrative returns.

These schemes have been on the rise in recent years, the ministry continued in its feedback to the proposed ban. They are running as Ponzi schemes and yet the government has no legal framework in place to stop them. If the bill takes time to be enacted, the government should prosecute crypto offenders under the Prevention of Money Laundering Act, the ministry said, echoing the views of several other departments.

If the proposed draft is passed into law, it could deal the final blow to an already-battered crypto industry in India. The RBI has been on the industry’s neck, just recently banning all crypto startups from its regulatory sandbox.