The government is set to prohibit "mining, generating, holding, selling or dealing" in digital currencies.
Indian investors who fall afoul of new crypto laws could face a $2.7 million fine and an 18-month jail sentence.
The government is set to prohibit "mining, generating, holding, selling or dealing" in digital currencies.
Those who break the law could also be arrested without a warrant and held without bail, according to Reuters.
There are fears these measures could deal a blow to the country's booming crypto sector, with figures previously suggesting India is now home to as many as 20 million investors.
Data from Chainalysis also indicates that India's crypto market surged by 641% in the 12 months to 2021.
It comes as New Delhi plans to push ahead with its own central bank digital currency instead.
The non-fungible token market could also be affected, and ministers are planning to clamp down on adverts promoting crypto exchanges.
Trading platforms have been aggressively enticing new users with the help of A-list Bollywood stars. Uday Singh Ahlawat, a corporate lawyer in New Delhi, told the Financial Times:
"At the Cricket World Cup, at least 70% of the advertisements coming on television were something to do with crypto."
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Another Twist in the Tale
India has been determined to heavily restrict cryptocurrency use for several years.
Back in 2018, the country stopped financial institutions from having business relationships with exchanges that allowed consumers to buy and sell cryptocurrencies like Bitcoin — with a number of trading platforms closing their doors for good.
The controversial measures by the Reserve Bank of India were later overturned by the Supreme Court in 2020.
Although investors may feel uncomfortable at the prospect of an 18-month jail sentence for holding crypto, this is far less severe than the 10-year jail terms that had been proposed by lawmakers in 2019.
The slow drip, drip of news stories surrounding India's plans has caused chaos on local exchanges. At times, Bitcoin's price on local exchanges has been 15% lower than elsewhere in the world.
It's also bad news for the Western crypto companies that have been seeking to establish a presence in India. Earlier this year, Coinbase revealed it planned to build a "high-quality tech hub" in the country — generating hundreds of jobs for "world-class" engineers.
Home to 1.4 billion people, the introduction of new restrictions could have ramifications for the crypto industry's bold ambitions to go global.
In recent years, advocates within India have also warned that the government's hardline approach could diminish economic growth — and potentially even put the country at a disadvantage as other nations seek to embrace digital assets.
