Since last few days there has been a lot of FUD about a particular thing in cryptocurrency circles of India. A recent exclusive report of Bloomberg Quint claimed that India’s draft bill on cryptocurrency regulation suggests maximum jail term of up to ten years. As you can imagine, all hell broke lose after this article was published. There was a lot of fear in everyone who read it, and people wondering whether they should keep their crypto assets or not. We, however, didn’t report on that article because after reading it we were not convinced about many of the things claimed in it. And we’re still not convinced about them. Here we’re going to tell you about those things in detail, along with the reasons of why are we not convinced. Let’s get started:
#1. Lack of Clarity
The author of didn’t include any documentary proof in the article itself to support his claims, but he did share two images of the supposed draft cryptocurrency bill on his Twitter profile. You can see his tweet below:
— Nikunj Ohri (@Nikunj_Ohri) June 7, 2019
When we went through those images though, we found a lot of information to be missing. The first image shows only a small index of the bill, while the other image shows only a small paragraph mentioning that whoever deals in cryptocurrencies for purposes mentioned in the clauses (e), (g) or (h) of Section 8(1) shall be liable to be punished with fine, 10 years of jail, or both. However, any picture of relevant clauses from Section 8 is nowhere to be seen in his tweet. Moreover, even if that is true… this indicates that probably there is not going to be an absolute ban on dealing in cryptocurrencies. The clauses (e), (g) or (h) may be referring the the crimes of money laundering, financial fraud or any other criminal use of cryptocurrencies, and it’s completely logical if government plans to stop the use of crytpo assets for these crimes.
#2. 10-year jail term given in most heinous crimes
Culpable homicide. Rape. Human trafficking. Terrorism. These are some of the crimes for which a person can be sentenced to imprisonment of 10 years or more, according to Indian Penal Code (IPC). Does trading of an electronic asset even come close to them by any stretch of reasoning?
And on the other hand, if we talk about financial crimes, money laundering and financial fraud are two of the most serious crimes that one can do in their lives. They’re also cited by the government as key reasons for suggesting a crypto ban. However, even these crimes don’t lead someone to a jail-term of ten years. The maximum imprisonment prescribed for money laundering and financial fraud in Indian constitution is up to 7-years. Then why would the officials prepare a draft bill suggesting 10-years of jail for something whose nature, according to them, is similar to these two things? It doesn’t seem logical at all.
#3. IRDAI and PFRDA role unclear
Insurance Regulatory and Development Authority of India (IRDAI) is the key regulatory body behind regulation of Insurance industry in India. Similarly, Pension Fund Regulatory and Development Authority (PFRDA) is a body that regulates the pension funds of India. The work of these two regulators rarely comes to any such situation where they may cross the roads of cryptocurrencies, because institutional interest in crypto doesn’t exist (in India). And even if any Insurance companies or Pension funds think about entering this space, the government can bar them from doing so very easily.
So, it was not surprising at all that these two institutions didn’t emerge anywhere in the picture of India’s crypto regulation until May 2019. However, the surprise came on 7th of June when this Bloomberg Quint report claimed that the bill suggests development of a separate board for monitoring of crypto transactions, and the board would include members from IRDAI, PFRDA, RBI and SEBI. If such a board is ever established, SEBI’s existence in it seems logical. RBI is logical. But what would IRDAI and PFRDA do in that board?
#4. It’s just a draft
And lastly, even if this draft bill is true… then still we can’t forget the fact that it’s just a draft! Drafts go through many changes before taking the shape of final laws. So even if the members of Garg committee have created such a bill, we don’t think that it will be implemented as it is. The Finance Ministry should certainly ask for changes in it.
So these are my views on the FUD of 10-year jail term for cryptocurrencies. Due to these reasons first of all we didn’t cover anything about this report because we felt that it won’t be wise to increase the FUD by reporting on something which has a very low possibility of coming true. But when we saw that the FUD is increasing rapidly, I decided to share these points with you guys. I’ve also filed 3 RTI requests with various relevant departments of the government to extract the truth on this, and will report the findings of RTI in the coming days so keep an eye on our updates. And till then, keep calm and trade wisely!