India is set to pass a law that would criminalise possession, issuance, mining, trading and transferring crypto-assets, a senior government official told Reuters.
This action follows a government plan to January 2021 that sought to ban private virtual currencies such as bitcoin while building a structure for official digital currency.
The Bill, which is yet to be made public, seeks to give digital currency holders six months to liquidate, after which penalties will be levied.
If the law is passed, India will be the first big economy to make cryptocurrencies illegal.
Bitcoin is considered the world’s biggest cryptocurrency, gaining more acceptance for payments following increased support from high-profile industry executives.
Top Indian officials have described cryptocurrency as a “Ponzi scheme”, while Finance Minister Nirmala Sitharaman has been slow in shutting down the use of the digital currency.
In March 2020, India’s Supreme Court declined to give the Central Bank powers stopping banks from handling digital currencies. This prompted investors to rush into the cryptocurrency space.