Reserve Bank of India Denies Involvement in Draft Bill to Ban Cryptocurrencies

India is embroiled in rumors of a cryptocurrency ban that would have made cryptocurrency mining, trading, and ownership illegal.

AccessTimeIconJun 7, 2019 at 4:30 p.m. UTC
Updated Sep 13, 2021 at 9:17 a.m. UTC

The Reserve Bank of India is denying any knowledge of a proposed ban on cryptocurrencies -- despite reports that a number of governmental agencies have backed the draft legislation -- according to a Right to Information request filed on June 4.

Varun Sethi, a lawyer specializing in blockchain, filed the inquiry into the RBI’s involvement with “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019" draft, following a report from the Economic Times. The legislation would ban the sale, purchase, and issuance of all types of cryptocurrencies.

Bank officials said that the RBI was not in communication with governmental agencies during the legislative process and had not received a copy of the bill. The bank forwarded several of Sethi’s questions to the Department for Economic Affairs as well as the Ministry of Finance -- including, “What are ‘official digital currencies’ as per the RBI?”

The bank has been involved in cryptocurrency legislation as recently as April when the organization unveiled a regulatory sandbox that would allow blockchain products -- excluding digital currencies --  to be tested on a sample of consumers. It has not endorsed a full ban on cryptocurrencies in the past.

Several governmental initiatives within the world’s second-most populous nation have been undertaken to regulate blockchain, when Prime Minister Narendra Modi first established a panel to study how to regulate the crypto sector in November 2017.

The Economic Times reported that a committee in support of a total ban, including representatives of the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC), among others was “of the view that already there is a lot of delay in taking action against cryptocurrency.”

If passed, those who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies directly or indirectly” could be jailed for up to 10 years.

The draft also advocates introduction of an official digital currency for India, the 'Digital Rupee,' that would presumably not land users in jail.

Image via Shutterstock.

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