Just weeks after the blockchain advocate Varun Sethi leaked the draft Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019, the Indian government made the entire report public. The Inter-Ministerial Committee (IMC) led by Subhash Chandra Garg, former secretary at the Department of Economic Affairs, Ministry of Finance, released the report which spelt doom for cryptocurrency in India.
While we have received some strong counterarguments for the ban from the Indian crypto ecosystem here, Timothy Draper, venture capitalist and founding partner of Draper Fisher Jurvetson (DFJ), Draper Associates, and the founder of Draper Venture Network and Draper University also had a lot to say about the proposed rules.
During an interaction with Inc42, Draper said,
“It is akin to the Luddites. They are in fact saying, ‘we will not tolerate progress.’ It will set them back 40 years. Imagine if they did this with the internet?”
In 2014, the billionaire VC had made quite a buzz in the crypto market by purchasing 30K Bitcoin at a premium price of $632 each from US authorities in an auction. Besides investments in Hotmail, Skype, Baidu, Tesla and others, Draper has also invested in a slew of crypto and blockchain startups such as crypto exchange Coinbase, Tezos and Authenteq.
Interestingly, the IMC report has not only proposed a complete ban on cryptocurrencies it has also proposed a jail term of one to 10 years for those who mine, hold, transact or deal with cryptocurrencies in any form, whether directly or indirectly through an exchange or trading. The draft bill also proposes a penalty of up to INR 50 Cr.
And Draper was very critical about this complete ban approach. “People will want to leave India to get to a country that is less backward. I suspect they will get out so they can live a better life.”
When Narendra Modi came to power for the second consecutive term, crypto stakeholders in spoke optimistically to Inc42 about their hopes for cryptocurrency in India.
The earlier Dinesh Sharma Committee report in 2017 had suggested a complete ban and also recommended that warnings should be issued to the effect that cryptocurrencies are neither coins nor currencies and consumers should stop trading in these currencies. The ministry of finance constituted another committee on in November 2017 to prepare a draft crypto regulatory framework. That report, out this month, and the attached draft bill, once again refused to recognise the cryptocurrencies either as currency or asset.
“It seems as though they are clinging to their power instead of thinking of the good of the country. This move shows that Modi has not yet rooted out corruption in the country. It lives on in his own government.” – Tim Draper
The developments in India have come at a time when many other countries including Russia are considering laws pertaining to cryptocurrency regulations in their country. According to News agency Tass, Russian deputy finance minister Alexei Moiseev told the press, “Now we are looking at the text [of the bill on digital financial assets] and within two weeks, I hope, we will come out for adoption in the second reading.” Moiseyev also told the journalists that the ICO regulation has already been approved.
Meanwhile, Bitcoin, regardless of the news, continues to tumble between $9K and $11K. The lead cryptocurrency is currently trading at $10.08K.