Indian officials have proposed to ban cryptocurrency as a payment method and set a deadline when investors must declare all crypto assets. Violators might be detained without warrants and kept without bail. A crypto bill might also call for an uniform know-your customer (KYC), for all crypto exchanges.
Proposed Rules for Indian Crypto Bill
As a cryptocurrency bill awaits to be taken up in parliament in India, several reports have emerged about what’s in the bill, which the government has not made public.
Although crypto assets are reportedly being regulated, India is planning to prohibit the use of cryptocurrency as a payment method, Reuters reported Tuesday. Citing an unnamed source, Reuters also provided a summary from a bill that it had seen.
The proposed legislation also states that the rules will be “cognizable.” Violators may be arrested without a warrant and held without bail, the news outlet detailed, quoting the summary of the bill:
The Indian government is planning a ‘general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing’ in digital currencies as a ‘medium of exchange, store of value and a unit of account.’
The proposed legislation for crypto will legalize cryptocurrency, even though it won’t be accepted as legal tender in India.
Sources suggest that self-custodial wallets may be banned. The CEO of an Indian crypto exchange explained that this could prove difficult. Recently, he described his expectations regarding crypto legislation and self-custodial wallets.
Bloomberg also reported Tuesday that India’s government will set a deadline to permit investors to declare their cryptocurrency and follow the new rules.
The Economic Times reports Wednesday that proposed crypto legislation will force cryptocurrency exchanges to disclose their know-yourcustomer (KYC), data to regulators and government agencies such as the Securities and Exchange Board of India(SEBI), Reserve Bank of India [RBI) and the income tax division.
According to the news outlet, the crypto bill will require a common KYC process across all cryptocurrency exchanges. This is in addition to existing procedures that each exchange platform follows.
Regarding crypto taxation, the government is planning to add cryptocurrency to Section 26A of the Income Tax Act in the upcoming budget, the publication conveyed, noting that this will “necessitate taxpayers to reveal their cryptocurrency investments both in India and abroad.”
Last week, NDTV reported that it has seen the government’s cabinet note which names SEBI as the regulator overseeing crypto activities in the country. Nirmala Sitharaman, Indian Finance Minister, confirmed that the cryptocurrency bill was rewritten from its original draft, which sought to ban all cryptos, including bitcoin, and ether. She answered several questions from the parliamentary committee regarding the cryptocurrency regulations.
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