A Cabinet note circulated by the government on the proposed cryptocurrency bill has suggested regulation of private cryptocurrency rather than banning it. The note also says that crypto will not be recognised as legal currency in India. Further, the legislation describes Cryptocurrency as Cryptoasset, according to the note.
Cryptoassets will be dealt with the existing crypto exchange platforms which will be regulated by Securities and Exchange Board of India (SEBI). A cut-off date will be prescribed for those having cryptoassets to declare the same and bring under the crypto exchange platforms - which will be regulated by the market regulator.
The proposed virtual currency by the Reserve Bank of India (RBI) has not been clubbed with the new crypto bill. However, the central bank will regulate issues related to cryptocurrency.
All those found violating the exchange provisions will be penalised with criminal imprisonment of upto one and a half years. Penalties in the range of Rs 5 crore to Rs 20 crore may also be levied by the regulator.
As a deterrent for those found using these assets for terror related activities, the provisions of the Prevention of Money Laundering Act (PMLA) will apply with suitable amendments.
Earlier this week, Finance Minister Nirmala Sitharaman said the risk of cryptocurrency going in the wrong hands is being monitored. The minister also stated that there is no decision to stop advertisements of digital currencies.
Ms Sitharaman added that the government has no proposal to recognise Bitcoin as a currency in the country and that the government does not collect data on Bitcoin transactions.
The government had said that it has received a proposal from the RBI to include digital currency under the definition of a 'bank note'.
In October, the RBI had introduced the proposal of Central Bank Digital Currency (CBDC). CBDCs - digital or virtual currency - are the digital version of fiat currencies, for instance, rupee in India.