New crypto bill proposes 1.5 years jail time for anyone violating new rules: Report

The new crypto bill proposes strict punishments on anyone who violates the rules set by the government, according to a report by Reuters. The government had tabled the bill during the winter session of Parliament and earlier planned to ban all cryptocurrencies. However, the report suggests that it is now considering appointing a markets regulator to oversee cryptocurrencies and classifying cryptocurrencies as financial assets.

All the crypto holders in India will be given a deadline to declare their assets and meet any new rules. The bill is likely to use the term 'cryptoassets' rather than 'cryptocurrencies,' and won't refer to the central bank's plan to create its own digital currency. There will also be a law to make those who infringe the law subject to arrest without a warrant and being held without bail.

The bill says that 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". It says that anyone who violates the rules can be fined as much as 200 million rupees ($2.7 million) or imprisoned for 1.5 years. The government may also consider prescribing a minimum threshold for investing in crypto assets to safeguard small investors.

There is no official word from the finance ministry on the same.

"They can't stop the global movement of crypto, even if they try they will fail hard, and they could be forced to reverse the decision in near future. The government should not throw away a 1.1 trillion dollar market opportunity just to make clear a way out for their centrally banked digital currency. I believe both CBDC and cryptocurrencies can exist together," Hitesh Malviya, founder, itsblockchain.com told India Today Tech.

The government seems undecided on the future path for cryptocurrencies. It had initially proposed a ban earlier this year ahead of the Union Budget but decided to relook the bill. The RBI also showed interest in bringing its own digital currency. Meanwhile, there was a surge in crypto investors in the country during this period. While no official data is available, industry estimates suggest there are some 15 million to 20 million crypto investors in India.

Malviya believes that the government should understand the current size of the market, and they should also think about the number of people who are making a living out of their cryptocurrency investment.

"If they introduce such laws then it will create an environment of fear, it will cause a devastating situation among those citizens who are solely dependent on income-generating from cryptocurrency trading and investments," he added.

The government may also come down heavily on advertisements that seek to woo new investors.