Topic: [2021-03-15] [Reuters] India to propose cryptocurrency ban, penalising miners (Read 507 times)

A number of banks are now suspending their support for cryptocurrency exchanges.

https://www.firstpost.com/tech/news-analysis/paytm-payments-bank-suspends-support-for-cryptocurrency-exchanges-why-banks-in-india-are-retreating-from-digital-currencies-9641521.html

The latest one to refuse banking service to cryptocurrency users is Paytm Payments Bank. There was a statement from one of the exchanges a few days back, that they will be unable to use (deposit/withdraw) PayTM for transfers. There is not yet any official announcement from the government regarding the ban on banking services. So if the banks are doing this, then they might have received some insider information.

In this regard, kindly note that the Lok Sabha or Rajya Sabha has not yet moved towards penalizing bitcoin holders. The was an inter-ministerial committee formed which had prepared the draft bill wherein it provided for banning of crypto currencies and penalizing holders. However, even this bill provides for a exit window for existing investors which was later confirmed by Anurag Thakur, Minister of State for Finance. You can check Section 21 of the proposed bill for this portion.

But this bill in fact proposes to penalize everyone involved in crypto related activities, including miners. We can only hope that this bill gets redrafted once government comes to senses.

Also, while there is lot of speculation on this top, I would suggest one should focus more on the facts rather than the opinions of certain people. I have collated the facts of the ban in India in this article and have provided the link to the proposed bill as well: https://bitcointalksearch.org/topic/guide-on-crypto-banprohibition-in-india-so-far-only-facts-and-press-releases-5339221

If you know how things work in India, you will not post something like this. In India, the freelancers are under all sort of harassment and this is not a new phenomenon. This has been the case for the last 3 decades. The government of India doesn't want freelancing, because it deprives them of valuable tax revenue. When an individual do freelancing, he is liable to pay only the income tax. On the other hand, the IT companies need to pay around 70%-80% of their revenue in various taxes like VAT, GST, Export duty.etc. The government even banned PayPal because of this. Now they are targeting Bitcoin, because many of the freelancers are receiving their income in the form of BTC.

In any case, at this stage of the fight against the pandemic that has swept India so hard, it would be wrong to deprive those who can feed their families from this source of income, or even part of the income. I cannot say that I am deeply immersed in this issue, you are much more aware, but reasoning logically - any way to give the population earning remotely, without leaving their homes, without risking their lives and the lives of those around it, is important. I hope this does not happen this year, and by the time the COVID-19 crisis subsides, the perception of this cryptocurrency problem may have already changed.

Well.. the ban was not proposed very recently. It was first proposed in 2018 by the then Finance Secretary of India, Subhash Chandra Garg. He wanted the government to impose a jail term of 10 years to anyone found to be in the possession of cryptocurrency. Bureaucrats such as Mr. Garg believes that ordinary Indians should have no financial freedom and should dance to the whims and fancies of people like him. Unfortunately, Mr. Garg was kicked out of office, when he entered in to a spat with one right-wing politician.

We thought that the government would change it's stance towards the cryptocurrency, but it never happened. The bureaucrat who succeeded Mr. Garg also followed the same policy, of not allowing cryptocurrency in India. Finally the law was finalized and uploaded to the parliament website in January 2021. But there was a strong social media campaign against it, and the finance minister was forced to put it on hold. But we don't know when they will resuscitate the law and table it in the parliament.

Untimely? Yes it is but government wont really be realizing once decision had been made then they would really push through it and also not majority of india citizens are much aware with crypto
for us to say that they would really be needing some source of income and that wont really be able to compensate but well it is better to have than nothing at all.For now the current situation
they are in when it comes to pandemic then they are really on a very hard situation but proposing that crypto ban, i doubt that it wont  really be changed.

Against the background of the third wave of the COVID-19 pandemic in India, such a decision would be completely untimely. People have already lost their income due to the closure of businesses and due to the inability to work. While working with cryptocurrency and trading online could help a large number of Indians get income in this difficult time for the country. I hope that the decision, even if it is made, will not be taken in such a difficult period.

The decision can be blamed on consumption of electricity and accidents, but they are lying.

Don't believe their excuse.  The Indian government doesn't like gold or bitcoin because it removes people and their assets from the government's control.  There is no excess power consumption with gold, yet there are restrictions on gold in India.  The real thing to note is that they don't believe in freedom and the power of individuals to decide things for themselves.  They want to be able to take "just a small percentage" from each of the 1.4 billion Indians every year through inflation with no one being able to protect themselves. 

Monopolies are bad, but government monopolies on currencies are worse.  It indicates that the governments don't trust the people - or perhaps they do trust the people, but they value their own power and money more than freedom for everyone else.  They want to enslave entire populations and the world to satisfy their own psychological control freak mental issues.  The politicians in Indian (everywhere else too) are NOT looking out for the people of India, they are looking out for themselves. 

I have to remind everyone that till now, there is no clear clarification on the status of cryptocurrency in India. For the last one month, there has been no additional statements on this subject, either from the finance minister or from the bureaucrats. Meanwhile, the number of cryptocurrency users have rocketed upwards in various Indian exchanges. For the first time, I am seeing ads for various exchanges in mainstream Indian TV channels.

Sorry for the late response to your post, but I only saw this now. To answer your question on why the government of India should accept a decentralized Crypto currency like Bitcoin.. well the answer is simple.

The world are moving to a global Crypto currency (Bitcoin BTC) when you look at the statistics internationally. Seeing that India has one of the highest unemployment statistics in the world and also the latest Covid shock.. they would be wise to give their economy a boost and also for their tax income. (Bitcoin creates informal jobs on a international scale and that money can boost India's economy)  

There is still no clarity about the issue. The finance minister was scheduled to table a bill, that would ban the possession of cryptocurrency during the budget session second phase (March 8 - April 8, 2021). But the bill was not tabled during this session, probably due to the social media campaign from the cryptocurrency users. The bureaucrats are still adamant about the ban, but as of now the politicians are not agreeing with them. Let's hope that there will be some clarity on this issue during the next few months.

I would like to wish India to get out of this issue without prohibitions and restrictions. The world is rapidly developing and integrating cryptocurrency into its economy. You can give a lot of examples of such integration, including already large and world-famous companies that connect the ability to pay for their goods and services with cryptocurrency. I would not like India to follow the path of prohibitions. I wish you to find a compromise third way that would suit both the bureaucracy and market participants. Good luck!

Being a resident of India, I can say that this is not entirely correct. It was not individual groups which advocated for the ban, but the bureaucrats. In India, most of the economic and financial decisions are being made by the bureaucrats and not by the politicians. And this ban was first proposed by Subhash Chandra Garg (the former Finance Secretary of India). Normally the decisions taken by these bureaucrats are made in to laws, but this time some of the ministers raised an objection. So we don't know how it will turn up in the end.

The difference between a guess and a statement is big. I'm not an expert on India, but these two options just came to my mind first. After rereading the thread, I realized this is that the economy does not play any role in this issue, only politics, and as I understand it, individual groups advocate that this is prohibited (mainly by the top) and the rapidly growing middle class, on the contrary, organizes a struggle for the right to use and against close from bitcoin and etherium. What about the fact that I have no place on the forum - a very loud and harsh statement))) I study here and do not teach anyone. So there is no need to distribute such recommendations, with all due respect to the status.

You are 100% wrong. There are no large scale Bitcoin mining farms in India (although there may be some small-scale individual miners). So the argument that this proposal was a result of excessive consumption of electricity is laughable. In the previous posts various users have posted in detail why the government came up with such a measure. If you still support this measure, then I am not sure what you are doing here in Bitcointalk.

On the one hand, such a decision can be caused by excessive consumption of electricity and accidents after a high load on the power grid. On the other hand, the state, solving this problem, creates risks for itself to miss out on great opportunities for the budget (replenishment by new taxpayers) and the country's population (creation of new jobs), as well as increasing the level of income of citizens. Difficult decision - but apparently they weighed everything well before making it. Only time will tell whether they were right or wrong, we'll see.

I have also the same opinion. Even after he was back (after his arrest he has made only a few posts) he continued to help users against various frauds in Indian P2P platforms. I know him as one of the most helpful Indian bitcoiners, who helped a lot of people who lost their money to scammers. Obviously when you deal in P2P, you don't know much about the criminal background of the other trader. There is a good chance that you sold your BTC for "dirty money" and I guess this is what happened to Pankaj Bhardwaj (escrow.ms).

Essentially this sums up the issue in India. Users are forced to rely on P2P platforms, because of harassment from the authorities. And this in turn makes them vulnerable to scams and frauds.

I know all about that, he was also very active here on bitcointalk, but with the updates and when he came back it didn't sound like his guilt was certain. Could have been the wrong person at the wrong time.

I'm sorry about that, and it was never my intention to belittle the struggle you fight there. I can't say it better so I'll cite the words by Carlton Banks from above:


I know it won't be easy, but I'm sure that sooner or later you, Indian bitcoiners, will win.

Don't have any recent information related to escrow.ms (his real name is Pankaj Bhardwaj). He was arrested in 2016, but he used to be one of the most trustworthy Bitcoin traders in India during the 2012-15 period. I don't know what happened after that. He used to play a very important role in Coinsecure, but they removed him after his arrest.

Here is the original thread in Bitcointalk that deals with his arrest:
https://bitcointalksearch.org/topic/warning-pankaj-bhardwaj-alias-escrowms-has-been-arrested-dont-escrow-him-1359865

And here is a news article which deals with the same topic:
https://timesofindia.indiatimes.com/city/delhi/Card-frauds-used-bitcoins-to-trade-money/articleshow/50922983.cms

Has he actually been convicted and was he actually guilty? When the story first broke of his arrest it seemed he may have been a scammer but there was no certainty about it.

Any ban will fail as other countries have found out. All it does is push the prices up while traders move to decentralized/p2p exchanges in that particular country as happened in Nigeria.

In fact, if anything, it rather works in Bitcoiners favour.

^^^ India do have the second highest number of internet users and it is having the cheapest rates for mobile internet (3G/4G). On top of that, India is home to tens of millions of IT engineers. If the government was at least a bit more friendly towards cryptocurrency, then it could have resulted in huge number of new jobs and billions of USD in tax revenue for the authorities. But as of now, the cryptocurrency users in India face all sort of harassment from the authorities.

Guys, I believe what you are saying is true because you live there, and of course you know the situation better than I do. It's just ... Let me be a little more optimistic regarding India's future. What I read about India is that it's a young nation, median age is below 28 y.o., and that many of these young people are tech savvy. Also, it's a fact that currently India has the second highest number of internet users


I mean, even though in the nearest past things used to be bad, I believe in the bright nearest future for India.

Both yes and no. First thing to note here is that, 95% of the Indian households never provides you the freedom to start businesses and a common scenario here is that, if you never get placed in a company after you passout of the college you move over to business otherwise you are entitled to work for someone. Supressing new inventions has become a common task by the government and new inventors will always be hated by the government officials or at times would end up in prison or killed by local goons.

Second the Indian education system never teaches us the entrepreneurship lifestyle. Even if you tend to start a new business, there are possibilities of being extorted. Even if an innocent citizen like George Floyd is killed in the Indian streets, we can easily bribe the police and would be released from the prison without any crime cases.

There was interest since the earlier days but the interest wasn't on the ground breaking technology of bitcoin it was on the price mechanics. Most of the early adopters either became scammers (Nilam Doc, Amitabh S, escrow.ms) or left the scene leaving us here with just mere speculation stuff.

I was deeply involved into the torrenting and P2P file sharing community since the eMule days (2005?) but never had a chance to know about another P2P implementation (bitcoin) till 2016 and there were many like me too.

It would be wrong to say that there was zero interest before 2017. My friend (who introduced me to cryptocurrency) got his first coins in 2012. However, back then there were no India-based cryptocurrency exchanges and almost 100% of the trade was done through Localbitcoins and other P2P platforms. Creating an account in international exchanges such as BTC-e, MtGox and Bitstamp was also a bit hard for Indians during that period.

I heard some interesting firsthand accounts of what it takes for a power-hungry business to get connected to a power company (i.e. a shitload of money in bribes) so I'm not surprised to read stories like these.


Why is that? Potential to be extorted?


That wouldn't be the case if they bought a bit earlier when BTC was cheaper. The Indian local board on this forum was created many years ago and it wouldn't have been created if there was 0 interest.

Unless you have exceptional coding/programming skills, the salary can be very low in the Indian IT sector (average starting salary is around $400 per month). And that is the reason why 99% of the IT engineers try their level best to migrate to some of the developed nations (only around 1% to 2% manages to do that). Also, Bitcoin investment became popular only in 2017-18, when the exchange rates were already quite high. For comparison, in China the investment took pace during 2013-14.

This. A simple example is that, you can never build a house without bribing the local goons present in every single area of the country. On a broader scale, the civil engineers who are building the houses are forced to buy the building hardware materials from the local goons and if you didn't abide by them you would end up in getting threatened and if you move this case over to the police, the goons would bribe the police and the innocent business owner would end up in jail   Simply stating this is a shitty country run by highly corrupted politicians and their mafia like local goon gang. If you pursue an engineering degree and pass out without a higher score, you would end up working as a food packer on the road side markets and on the other side if you get a better score and finish up your engineering degree you should work as a slave for the IT sectors and you are frowned upon from starting any kind of businesses.

Almost 80% of the Indian households who work in IT sectors has meagre to zero savings hence one could never invest a proportionate amount in bitcoin. But the one who saves, invest in stocks and bitcoin and they would have made some money if they had entered the market in 2020.

The only reason why bitcoin is gaining traction in India is because we can make money by investing with them but otherwise open source softwares and OS like Linux are treated as inferior to closed source expensive bloatware like Windows. BTW we need to bring more awareness among Indians and educate them on the basics of how India is totally different from rest of the well developed nations.

I am not talking about the current scenario. I am talking about the situation in late 1980s, then the Indian government prohibited internet for ordinary people. It took many years for the citizens to receive access to internet. And for almost one decade, the only internet provider in India was the BSNL, which would provide dial up connections with a maximum speed of 28 Kbps. What I am trying to say is that, the mentality hasn't changed much.

But, unlike in North Korea, they didn't ban the Internet in India, right?

I understand what you are saying about unethical and immoral bureaucrats, I myself live in a country which is hardly better in this regard. But things used to be worse in the past, that's a fact. The world is changing for better overall, and I believe that at this point banning Bitcoin in India is impossible.

As a foreigner having business interests and family connections in India, I would say that doing business in this country is extremely difficult. You have to deal with all sort of shady characters. The bureaucrats are not only ignorant and corrupt, but they are also unethical and immoral. The so called standoff between the ignorant people in government/bureaucracy and educated entrepreneurs you have mentioned has existed ever since India came in to existence in 1947. You need to understand that this is a country which tried to ban computer and internet. And before that owning foreign currency without special permit was a criminal offense in India (even for Indians traveling to foreign nations).

I imagine cryptocurrency holders are disproportionately wealthy, compared to the rest of the population. If India's campaign laws permit this, theoretically <1% of the vote could have several times the power.


Wouldn't they prefer if they could hold and transact with Bitcoin without having to rely on intermediaries?

The worst part of the current situation with governments is that people there, in many cases, are less educated than people whom they coerce to follow their rules. It would be hell on earth if the governments had absolute power, but fortunately this is not the case in many countries already, and overall I think that in the future, wise people will find a way to rule the world, one way or another.

The ban in question, if happens, can only exacerbate the stand-off between the ignorant people in the government and educated Indian people. And, indeed, the government should be worried about the possible outcome.

Here they are not breaking the law. Politicians and powerful people are using proxy ownership, which is not illegal as per the law. Their coins are being held by their proxies who are not Indian nationals. It is allowed in the proposed legislation and therefore you can't say that they are doing something illegal. However, for the ordinary people there is no such provision. An average Indian earns $1,000-$2,000 per year and he can't afford to find proxies in foreign nations.

er, because the politicians want all the BTC for themselves, and want to use lies and (threats of) violence to do so?


and because (unlike the above-mentioned Indian computer programmers), the politicians don't have any skills to sell outside of India, they already sold every last little thing they could get their thieving little hands on.


Stand tall Indians, the government are scared of how powerful Indian bitcoiners are

I understand that technically they can pass a law, which they know how to circumvent, while ordinary people will be affected to the fullest. What I don't understand is why do they need that? Circumventing a law is kind of illegal, right? Why would Indian Government want to make criminals out of themselves, and what would they gain from banning crypto for regular folks?

Put your money in bitcoin and keep control of the keys: if things would go bad in your country consider to leave it for good. I know it can be hard to leave your roots behind you but, owning BTC, I would be open to basically anything.

Being a resident of India, I would say that even of politicians and other powerful people own Bitcoins, the proposed ban will have a limited impact on them. These people can easily trade in cryptocurrency, through their friends who reside in foreign nations. Even during the demonetization campaign of 2016, more than 99% of the demonetized banknotes managed to find it's way to the bank. So the large holders know how to get around these issues. Only the ordinary users who don't have access to such proxies will be in trouble.

I believe they are not just 8 million of regular people, some of them are politicians themselves. If it were a standoff between crypto holders and government, I wouldn't bet much on the holders, but it's not that simple. We don't know how many influential people in India own Bitcoin and don't want to part with it. It is very likely that at this point most of them are Bitcoin holders.

^^^ Indian users are not sitting idle. For the last two months, they have been involved in a massive social media campaign against the proposed ban. Also, there is another campaign in which cryptocurrency users have sent emails and letters to the parliamentarians who represent them, urging not to ban cryptocurrency. Anyway, state elections are scheduled for next month, and at least from my part I have decided to use my vote wisely.

You forget that India is a country with almost 1.4 billion people, and what in that context is 8 million, or as we have already concluded probably more people who own or trade cryptocurrencies? If it were about 14 million, it would still be only 1% of the total population - they do not pose a danger to politicians, especially if they are not united and begin to become politically active.

The whole thing is actually on the Indian crypto community, they have to exert as much pressure on the authorities as possible and show that they oppose such a law. It may not work, but if they do not raise their voice, they will give legitimacy to government actions.

There is a saying that says “Bad government is chosen by good people who stay at home”, of course in the context of the election process.

Do you really think the bill will pass? There are over eight million investors in cryptocurrencies in India, and I'm sure many of  them are not regular voters, but the very people who decide whether the proposed bill becomes law. It remains to be seen, of course, but I don't think they will be chopping the branch they are sitting on.

They don't want Indians earning money directly from abroad. Previously they made it extremely difficult for freelancers to receive payments through PayPal from foreign employers. PayPal tried to negotiate with the government for some time, but in 2020 they closed down operations in India. The freelancers shifted to Bitcoin and Ethereum, because receiving payments was relatively easy. Obviously the government once again took notice of this. As per the government, if you want to earn money, then you need to do that through intermediaries decided by them. IT employees in India earn only 5% or 10% of what their counterparts in US or UK, because the government has imposed all sort of direct and indirect taxes on them.

Still, the major worry for the government is that if cryptocurrency becomes popular then people may lose their interest in artificially inflated assets such as equities and bonds. Also, unlike stock market, cryptocurrency market is outside their control. They can't manipulate it so that they can keep the investors under perpetual slavery.

Indian Government will never earn you though easy money methods

8 million is the number of users registered to various Indian based exchanges such as WazirX and ZebPay. As far as I know, the majority of the Indian users don't trust these local exchanges. They primarily use the P2P platforms and in some cases international exchanges. So that's why I said that the real number of cryptocurrency users in India is very difficult to estimate. But IMO, it should be much higher than 8 million. ZebPay recently stated that they have 3.5 million registered users in India. WazirX gave a figure of 1.75 million a few months back. The number of users registered with CoinDCX should also be in the low millions.

the government of india wants blockchain, but they want to ban bitcoin and altcoins but without that in the process of banning bitcoin and altcoins they do not ban the technologies that come from bitcoin or altcoins. I commented on this in the last post that the government of India is striving to have its own altcoin (its own digital currency) because they are a radical government that takes sovereignty issues very seriously and intend to have the greatest possible control over their people. but at the same time the government of india wants some technologies coming from bitcoin or altcoins

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It is easy to understand government like that of India, for the government of India they must be thinking about the following: why should the people of India use something decentralized and created by anonymous people? this will hurt the country’s sovereignty, so they’re going to force their people to use the digital currency they’re going to create.

and in political terms no doubt that the government of india must be thinking that the more its people use cryptocurrencies that are decentralized the greater the risk that its people will start to demand that in their country government policies are more decentralized and transparent and start demanding more freedoms, and I doubt whether the government of India is willing to be more decentralized, to give greater freedoms to its people

According to some data in India there could be about 8 million of those who at least have accounts on one of the crypto exchanges - you will know better, but given the total population of almost 1.4 billion even that number is very small. Yet data from your crypto exchange shows strong growth in new users, and I think that scares your government.


Similar to what China did a few years ago, but with the difference that it still does not penalize possession or crypto mining. India actually wants to have complete control over its financial system and not allow any alternatives, which is just an indication of the degree of democracy that exists in that country. Still, we should wait to see if these laws will pass or will remain a dead letter on paper as before.

As Lucius said, it is important to stand up for bitcoin.  It has great technical value and great societal value in that it puts controls on governments.  Likely this is why India and the Biden admin (among many others) don't like it.  When governments don't trust (and don't fear) the people, that is the doorstep to tyranny.  The rulers in India (and now in the US and elsewhere) don't value liberty, the value control to enhance their own power. 

This time it is different from what we have in 2019, because the bill is already listed in the parliament website. The government seems to be delaying it slightly, so that the discussion will be taken up only after state elections (scheduled for next month) are over. Two of the southern states (Kerala and Tamil Nadu) are going to the elections and there are large numbers of cryptocurrency users in these states. I have talked to some of my friends from these regions and they are very angry with the government decision. All of them will be voting against the ruling party, due to this issue.

And today is ...? 2021, right. I'm pretty sure we'll read in 2023 something like "a bill to criminalize cryptocurrencies was proposed in 2021 ..." And, btw, was if for the first time, in 2019, when the Indian government almost banned crypto? No. It's a never ending story, and I feel like we'll always have it with us, "India is going to ban cryptocurrency".

There are so much FUD doing the rounds now.... because 5 hours ago... this was posted : https://cointelegraph.com/news/india-to-have-a-window-for-bitcoin-says-minister-amid-crypto-ban-fud

I quote : " In a Saturday interview with India Today, Sitharaman emphasized that the ministry does not plan to shut off Indian innovations associated with Bitcoin (BTC) and its underlying blockchain technology. " - Minister of finance of India

We know most of this is political games to garner votes for their election ....so mixed messages will be rife during these times. We also know the India government is very complex. (One says this and the other something totally different)  

Let's not over react on Internet FUD...... and just go on as normal.  

This is what everyone thought. Since the cryptocurrency trading is mostly conducted through P2P platforms in India, it is very difficult to measure the exact number of users. But when the government first proposed the blanket ban a few months back, huge number of people participated in the social media campaign against it. Some of the government ministers also noticed the campaign and adopted a conciliatory stance. But the finance minister was very adamant and she is going ahead with her plans to impose a blanket ban.

And to the second part of your question, whether legalizing cryptocurrency is going to have any detrimental impact on the economy or not - the government simply doesn't care. Their concern is not regarding any impact on the economy. The minister is explicitly stating that she will not allow any cryptocurrency that was "invented outside India". It is very clear now. Cryptos such as Bitcoin and ETH will be banned. After this, the businessmen who are close to the ruling party such as Ambani and Adani will come up with their "Indian" version of the cryptocurrency. The government thinks that if Bitcoin and other established cryptocurrencies are banned, they can fill the vacuum with their own cryptos.

I have to admit that it is really very confusing what exactly is happening in India when it comes to cryptocurrencies, completely contradictory news comes every day. Most people don’t have a good opinion of politicians, but what’s going on in India is really a circus, like kids in kindergarten are playing with law-making, which to me seems like those who are supposed to make decisions don’t really know what they discuss at all.

Vishnu.Reang, if memory serves me well, you have repeatedly written that the crypto community in India is very small and has almost no influence on politics - so I think you should get organized and start fighting for your rights. I think all these proposals that are emerging actually stem from the ignorance of politicians who consider cryptocurrencies a threat - and has their legalization in countries like Germany or Japan had any detrimental consequences for those countries financial systems?

India has been more on the denial side and not being positive as far as have read on internet. Also, they might want to bring their own currency and due to which do not want other currency to get promoted so this could be the reason of the ban they want to impose it.

https://www.reuters.com/article/us-india-cryptocurrency-ban-idUSKBN2B60R0



The cryptocurrency users were recently hoping that the government may go easy on Bitcoin, since the finance minister had issued some vague statements hinting that there will be no blanket ban. But it looks as if the minister was just trying to fool the Bitcoin users until the regional elections are completed (elections are scheduled for next month). Now it is up to the users to decide what action they need to take during the elections.