The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, which on Tuesday gave approval to Unregulated Deposit Schemes Bill, 2018 have tightened regulations around cryptocurrencies like Bitcoin, Litecoin, and others.
The statement released by the Finance Ministry said that the bill provides for a complete prohibition of unregulated deposit taking activity. It also includes deterrent punishment for promoting or operating an unregulated deposit taking scheme and stringent punishment for fraudulent default in repayment to depositors.
The bill raises concerns for cryptocurrency as the government has already put it under the category of illegal tender.
The Finance Minister Arun Jaitley in his budget speech said cryptocurrencies are not legal tender and the government discourages its use.
The government has been warning consumers to be alert before investing in virtual currency like bitcoin and compared it with notorious Ponzi schemes.
“The Virtual Currencies (VC) don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices. There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors,” the Finance Ministry had earlier said.
Reserve Bank of India (RBI) has also cautioned potential investors about the risks in investing in cryptocurrencies on three earlier occasions in December 2013, February 2017 and December 2017.
Last month, the Registrar of Companies (RoC), under the Ministry of Corporate Affairs, stopped registering cryptocurrency exchanges under the Companies Act, 2013. At present, there are around 15 bitcoin exchanges in India.
Amidst the whole conundrum, the Economic Affairs Secretary Subhash Garg-led panel is expecting to submit its report that will contain regulations and explanations on how to deal with cryptocurrencies by April.
The panel was set up in December last year to study the impact of cryptocurrencies and come up with recommendations to regulate them.
The development was first reported by Zee Business.