India to Impose Ban on Crypto Payments, Deadline for Declaring Crypto Assets, KYC Rules: Report

A cryptocurrency bill is awaiting to be voted in India’s parliament. There are many reports about what the bill contains, but the government has not made them public.

Although crypto assets are reportedly being regulated, the Indian government plans to ban cryptocurrency payments, Reuters reported Tuesday. Citing an unnamed source, Reuters also provided a summary of the bill that it had seen.

The rules would be “cognizable” according to the proposed legislation. The bill’s summary stated that violators could be held without bail and arrested without warrant.

The Indian government plans to prohibit all individuals from mining, generating and selling digital currencies. This is to prevent them from being used as a “medium of exchange”, store of value, or unit of account.”

Although cryptocurrency will not be recognized as legal tender in India like it is in El Salvador , the proposed legislation will allow it to be.

Sources suggest that self-custodial wallets may be banned. The CEO of an Indian cryptocurrency exchange explained that this could prove difficult. He described his expectations in regard to self-custodial wallets, and the new crypto legislation.

Bloomberg reported Tuesday that the Indian government plans to give investors a deadline for declaring their cryptocurrencies and complying with new rules.

The Economic Times reported Wednesday, that crypto exchanges will be required to share know-your-customer data (KYC), with regulators and government agencies including the Securities and Exchange Board of India, the Reserve Bank of India, and the Income Tax department.

According to the news outlet, the crypto bill will require a uniform KYC process across all crypto exchanges. This is in addition to existing procedures that each exchange platform follows.

The government plans to include cryptocurrency in Section 26A of Income Tax Act. This will require taxpayers to disclose their cryptocurrency investments in India and abroad.

NDTV reported last week that it had seen the cabinet note naming SEBI as the regulator responsible for crypto activities in India. Nirmala Sitharaman , Indian Finance Minister, confirmed last Wednesday that the crypto bill was reworked. The original version of the bill seeks to ban all cryptocurrency, including bitcoin and Ethereum. She also answered many parliamentary questions about the proposed cryptocurrency regulation.