India is set to impose a total ban on cryptocurrency investments, with regulators also planning to give digital currency holders an adjustment period of three to six months to close their holdings, Finance Magnates disclosed, citing a Bloomberg report.
Since the country’s central bank does not support the electronic currency, the government will restrict their usage in all forms through a new policy that will be proposed in Parliament, an unnamed senior Finance Ministry official said.
Transacting with cryptocurrencies via foreign exchanges will also be restricted in the world’s second most populated nation.
Bracing for impact
The official said India’s new law would be patterned after China’s regulatory governance, which has effectively clamped down on the usage and trading of cryptocurrency, while India’s regulators work on issuing its own digital currency.
Sathvik Vishwanath, co-founder, and chief executive officer of major Indian virtual currency exchange Unocoin, told Bloomberg India’s domestic crypto market eagerly awaits “details to come out to determine their next course of action.”
Cryptocurrency prices dropped more than 30% between Jan. 30 and Feb. 1 this year, days after the government’s plan to crack down on private cryptocurrency was revealed, Vishwanath said.
India’s legislators introduced last month “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” for discussion in the ongoing budget deliberations of Parliament.
India is an emerging economy that has seen a huge increase in demand for cryptocurrency last year. Virtual exchanges in the country reported rising volumes as a result of substantial demand in retail.
However, despite the widespread adoption, India’s digital currency community has yet to fully embrace the promise that cryptocurrency holds in the country with an untested regulatory system.
In March last year, India’s Supreme Court revoked the Reserve Bank of India’s April 2018 prohibition on local financial institutions providing services to businesses that transact in crypto, effectively giving cryptocurrency companies across the nation full legitimacy.
Image courtesy of LaterClips/YouTube