On Monday, India proposed a law banning cryptocurrencies, fining anyone who buys, sells, holds or trades digital assets, kicking off a 10% pullback from Bitcoin's ATH of $61,800 on Saturday.
Bitcoin hit a record high of $61,800 on Saturday after U.S. President Joe Biden signed off on his $1.9 trillion fiscal stimulus and ordered millions of additional vaccinations to be produced in the coming weeks.
India provided a framework for the cryptocurrency ban in January, but India followed through with their promise on Monday by formally introducing the crypto ban legislation — instantly souring the mood of crypto investors.
India will fine anyone trading in the country or even holding such digital assets, a senior government official told Reuters, including “all private cryptocurrencies.”
The bill leaves some exceptions to promote the general use of blockchain technology, but it's unclear what this will mean for non-fungible tokens (NFTs) and other emerging social tokens.
“It looks like the plans by the Indian government to criminalize cryptocurrencies is forcing at least some investors to pull out of this market, at least for now,” said a senior analyst at StockCharts.com.
India, Asia’s third-largest economy, criminalizing possession, issuance, mining, trading and transferring crypto-assets is more than FUD, apparently. Bitcoin fell as much as 10% on Monday after hitting a new ATH on Saturday.
In India, despite government threats of a ban, over 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto assets, according to estimates.
In May, India's Supreme Court overturned the ban, triggering a surge of Indian interest in cryptocurrencies and aiding Bitcoin's bull run.
One of India’s oldest exchanges, Unocoin, has added 10,000 new users per month since the Supreme Court decision.
According to Reuters, top Indian officials have called cryptocurrency a “Ponzi scheme”, but Finance Minister Nirmala Sitharaman this month eased some investor concerns by saying, "We are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” she said, “There will be a very calibrated position taken.”
The senior official said India doesn't have a problem with technology, but rather they want to build their own using similar blockchain technology, possibly using central bank digital currencies (CBDCs).
"There’s no harm in harnessing the technology,” she said, went on to discuss the penalties imposed on those who do not liquidate crypto assets within the grace period specified in the law.
The ban could result in jail times of up to 10 years for anyone who mines, generates, holds, sells, transfers, disposes, issues or deals in bitcoin or any other non-authorized digital asset.
Bitcoin is trading at $55,360 at time of writing, down 10.4% from Saturday's high of $61,800.