The Central government is considering to give Indian cryptocurrency holders a deadline in order to declare assets and become compliant with forthcoming new rules, according to a Bloomberg report that cited people familiar with the matter. Notably, SEBI (Securities and Exchange Board of India) will reportedly be roped in to oversee and regulate cryptocurrencies, given that it can potentially be classified as a financial asset.
According to a recently circulated cabinet note, the term ‘crypto assets’ will be put in place instead of cryptocurrencies, along with a clear distinguishment of the same from the digital currency plans (Central Bank Digital Currency, or CBDC) that the government and RBI intend to pilot early next year.
Bloomberg also reported that as punishment of any violation, a fine of Rs 20 crore or about $2.7 million, or imprisonment of 1.5 years will be slapped on the individual, as per the proposals. Along with this, setting a minimum threshold or limit in regards to investing in crypto assets in order to safeguard small investor is also in the works.
While the government and many noted industrialists like Mukesh Ambani are extremely bullish on the underlying technology of cryptocurrency i.e. blockchain, the finance minister clarified that the government has no active plans of bolstering the cryptocurrency space in the country, in addition to not recognising it as legal currency.
Growing by over 641 percent in 2021, the Indian cryptocurrency market has risen exponentially, according to a report from Chainalysis. As the seventh most ‘crypto-aware’ nation in the world and second in terms of the number of cryptocurrency owners out of 154 countries as per the 2021 Global Crypto Adoption Index by Chainalysis in August this year, the Indian crypto space is a vibrant and thriving ecosystem.
The Union government has for long, reiterated the potential dangers of unregulated cryptocurrency, which include terror funding and more. While the government is reworking the old bill, which had proposed to ban all private cryptocurrencies, to factor new perspectives, post which it will be presented in the parliament. This will also include taxing gains on transactions undertaken by these virtual currencies.