In a move designed to tighten its grip on cryptocurrency trading, the Indian government has proposed a bill that essentially bans cryptocurrencies. A draft version of the “Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019” bill makes it illegal to mine, generate, hold, buy, sell, or deal in cryptocurrencies. The bill makes all of the activities listed above a “cognisable and non-bailable” offence. Fines and imprisonment of up to 10 years await those found guilty of breaking the law. It also allows cryptocurrency holders 90 days to declare and dispose of cryptocurrencies.

The catch in the bill is that it also proposes creating a digital version of the Rupee, India’s national currency. The Reserve Bank of India – India’s central bank – had formed an inter-governmental group last year to study the feasibility of introducing a central bank administered digital currency to tamp down on illegal activity. But reports indicated that the bank thought it was “premature” to think of a digital currency.  

If it is passed into law, the bill could throttle India’s emerging cryptocurrency ecosystem. India-based crypto exchanges have reported increasing trading volumes since the rally in crypto prices at the end of 2017. One of them, Wazirx, claimed to Bitcoin.com that daily trading volumes had crossed $11 million in April this year. (That figure should be taken with a massive dose of salt since nearly 95% of crypto exchanges post fake trading volumes).

That said, India is among the top five centers for cryptocurrency mining. Adverse government regulation could result in their shutdown. Previous reports have indicated that the Indian government is not amenable to such drastic measures and may not go for an all-out ban.