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Crypto rules violators may face penalty of Rs 20 crore or 1.5 year jail term

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Crypto rules

Highlights:

  • Violating crypto rules in India could lead to arrest without a warrant.
  • General prohibition on mining, generating, holding, selling, or dealing of crypto.
  • Violators might face fines of up to 200 million rupees ($2.7 million) or 1.5 years in prison.

Cryptocurrencies may not be completely banned in India and the government may create a framework to regulate highly risky virtual assets, as per multiple reports. Under the proposed legislation, cryptocurrencies could be renamed as crypto-assets, which would be regulated by the Securities and Exchange Board of India (Sebi).

India’s proposed cryptocurrency regulation bill could result in hefty penalties for violators: Those who infringe the law could be subject to arrest without a warrant as well as being held without bail. Violations could lead to monetary penalties ranging from Rs 5 crore to Rs 20 crore.

The union government will probably give Indian cryptocurrency holders a deadline in order to declare their assets and to follow the new rules. SEBI (Securities and Exchange Board of India) will reportedly be asked to oversee and regulate cryptocurrencies, given that they can potentially be classified as a financial asset.

Crypto rules in India

The government plans a “general prohibition on all activities by any individual on mining, generating, holding, selling, or dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”. The bill is aimed at consumer and investor protection, and to prevent tax evasion and money laundering. The bill empowers the central government to exempt certain activities in the public interest.

Nirmala Sitharaman, the Finance Minister, stated last week that the government has revised an earlier draft — which advocated banning all private cryptocurrencies — to account for new developments. She went on to say that there was no plan to recognize Bitcoin as a currency in the country.

If the government’s cryptocurrency bill is indeed aimed at regulating the virtual asset, it will be a big relief to India’s growing cryptocurrency ecosystem and retail investors. There has been a sharp rise in the number of cryptocurrency investors in India since 2020. The size of crypto assets in India is about Rs 45,000 crore with about 15 million investors.

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