New Delhi: India is considering appointing its capital markets regulator to oversee cryptocurrencies, according to people with knowledge of the matter, as authorities look to classify them as financial assets.
The people said that they asked not to be identified as the discussions are private and that the government of Prime Minister Narendra Modi plans to introduce legislation in the ongoing parliament session.
One person said that the bill will not be referring to the central bank's plan to create its own digital currency and will use the term criptoassets rather than cryptocurrencies.
The people said that any violators could be fined as much as 20 crore $2.7 million or imprisoned for 1.5 years. The government may have a minimum threshold for investing in crypto assets to protect small investors, according to Bloomberg News earlier in the day.
A finance ministry spokesman couldn't be reached for comment.
Finance Minister Nirmala Sitharaman said last week that the government has reworked an earlier bill that had proposed banning all private criptocurrencies to factor in new developments. She said there was no proposal to recognizeBitcoin as a currency in the country.
The market for cryptocurrencies in India has grown by 641% in the past year through June 2021, according to an October report from Chainalysis, a crypto-analysis firm. The government is considering taxing gains from digital currency, and there are calls to impose stricter rules for transactions in virtual coins due to the unregulated nature of the business.
This month, Modi held a review on digital currency and discussed that unregulated criptocurrency markets can't be used as avenues for money laundering and terror financing.