The currency aspect will not be adopted.
A Cabinet Note by the Government on the much-awaited cryptocurrency bill states that private cryptocurrency will be regulated rather than banned, as per sources cited in an NDTV Profit article.
Provisions of the Cryptocurrency Bill
Cryptocurrency will be called ‘crypto asset’. And, the currency aspect of crypto will not be adopted.
The financial markets regulator Securities and Exchange Board of India (SEBI) will also regulate crypto exchanges.
Crypto asset holders will also need to disclose all the assets and will be given a deadline for the same.
The digital currency proposed by the Reserve Bank of India (RBI) is not included in the cryptocurrency bill. However, RBI will regulate issues pertaining to cryptocurrency.
Violation of the proposed law will carry punishment up to one and a half years. Penalties ranging from INR 5 crore to INR 20 crore could also be levied.
To clamp down on terror financing activities, provisions of the Prevention of Money Laundering Act (PMLA) will also be applied to crypto assets.
Information Technology industry stalwart and Infosys co-founder, Nandan Nilekani sees potential in the crypto industry.
“If we have a very well regulated and legal, lawful crypto market, not as currency but as assets, and lot of young people build innovative applications around that then these young people could create a wave of global companies,” Nilekani said at the Reuters Next Conference on Wednesday.
But he also cautioned that the laws should be robust enough so that crypto assets “doesn’t become a backdoor for money laundering.”
Investor Protection is Paramount
It has been reiterated several times by several legislators and regulators that retail investor protection will be a key factor in deciding the regulations.
That’s why India’s advertisements regulator the Advertising Standards Council of India (ASCI) is also in consultation with the Government about issuing fresh guidelines on crypto advertising.
ASCI General Secretary, Manisha Kapoor, told Economic Times (ET) that the aim is to properly disclose the inherent risks and returns along with ensuring that viewers do not mistake crypto assets as legal tender.
Other than advertisements, another concerning development for the Government is the emergence of similar to chit funds, Multi-Level Marketing (MLM) and Systematic Investment Plans (SIP), according to an ET report.
“It is observed that some individuals are going to small towns and raising money from people, mainly in cash, with the promise of great returns in cryptocurrencies,” revealed a source. “This is exactly like chit funds, but without any framework or regulations.”
Regulators are worried about such developments in which trusting persons are duped of their hard-earned money.
So, the Government is making concerted efforts by covering all the aspects in order to provide regulatory clarity to the industry.
Cryptocurrency or crypto assets have been walking an uncertain path for long. Regulation could provide clarity to the community and spur innovation by harnessing India’s famed pool of tech talent.
Note: This is a developing news. Updates will be made to the article as we gather more information.
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