A government panel in India has issued a recommendation to ban all “cryptocurrencies created by non-sovereigns,” a step which could be applied to Bitcoin.
“The Committee notes with serious concern mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these cryptocurrencies. All these cryptocurrencies have been created by non-sovereigns and are in this sense entirely private enterprises,” their report reads.
The panel said anyone dealing with digital currencies of any kind could face 10 years behind bars and be handed hefty fines.
As part of its recommendation, the panel laid out the reasons why cryptocurrencies should be banned.
“The Committee notes with serious concern mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these cryptocurrencies. All these cryptocurrencies have been created by non-sovereigns and are in this sense entirely private enterprises,” the report, – which you can read here – says.
“There is no underlying intrinsic value of these private cryptocurrencies. These private cryptocurrencies lack all the attributes of a currency. There is no fixed nominal value of these private cryptocurrencies i.e. neither act as any store of value nor they are a medium of exchange,” it adds.
Therefore, it continues, “the Committee is of the clear view that the private cryptocurrencies should not be allowed. These cryptocurrencies cannot serve the purpose of a currency. These cryptocurrencies cannot serve the purpose of a currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency, hence private cryptocurrencies cannot replace fiat currencies.”
Although largely critical of decentralized currencies, the report does support the possibility of a state-issued digital currency in India.
It also praises decentralized ledger technology, saying it is “an important and innovative technology, which will pay a major role in ushering in the digital age,” but calls for specific legislation to promote and regulate the use of blockchain technology in financial and associated fields.
India has to date had a tumultuous relationship with cryptocurrencies, seeing its fair share of scams and regulatory uncertainty. A virtual ban on cryptocurrency trading was established in April last year when the Reserve Bank of India (RBI) issued a notice to Indian banks asking them to stop dealing with any cryptocurrency businesses. But for now, peer-to-peer trading of virtual currencies remains legal in India.
Just last week Hard Fork reported on how police in India rescued three people, including two cryptocurrency traders, who were kidnapped and held to ransom for two weeks to the tune of $840,000 (80 Bitcoin).
India‘s tough stance on cryptocurrency comes two weeks after Facebook‘s controversial Librareceived an early jolt from the Indian government.
The panel produced the report and draft legislation which will be used by government and regulators before a final decision is reached, the government said today.