The forthcoming cryptocurrency bill in India, which has yet to be filed in Parliament, may not seek to outlaw cryptocurrencies. However, according to the Economic Times, exchange-to-exchange transfers are likely restricted.
According to the Indian publication, sources believe that a blanket ban on trade between bourses, wallets that hide the owner's identity, and Google Chrome extensions blocking users from moving around more than 4,000 cryptos — think MetaMask and other wallet integrations — will all be implemented.
The Indian government may construct a universal wallet, similar to a Demat account, to monitor retail crypto transactions. The government will require quarterly statements from cryptocurrency exchanges.
According to the Economic Times, the government is considering tracking all rupee inflows and outflows on Indian crypto exchanges. They will be the only ones permitted to operate within the country. This might entail the exchanges handing up their ledgers to the government every quarter.
The goal, according to reports, is to bring crypto exchanges up to par with significant stock or commodity markets. As well as preventing crypto transactions from circumventing the Foreign Exchange Regulation Act (FEMA).
This comes after NDTV claimed that the Securities and Exchange Board of India (SEBI) is likely involved in the crypto industry's regulation. According to the same note, investors in India will not be able to deposit their holdings on international crypto exchanges or private wallets.
These individuals will allegedly be given time to make the necessary changes after the bill is signed into law. Failure to do so could result in fines ranging from $5 million to $20 million.
India may develop its cryptocurrency wallet.
According to the Economic Times, India may construct a universal wallet for the crypto trade, similar to a Demat account, because the government will restrict the functioning of wallets controlled by private parties.
El Salvador established El Chivo, a national crypto wallet, early this year. Unlike India's plan, however, the wallet was created to aid in adopting Bitcoin as a legal tender. India, on the other hand, has no plans to do so. Sitharaman, India's finance minister, has already stated that the country has no plans to issue Bitcoin currency status.
El Chivo, on the other hand, solves the same problem that India is attempting to solve: it creates a closed-loop system in which crypto transactions can only take place within the specified system. A Chivo Wallet user can move funds from one Chivo Wallet to another, but not an external wallet.
While this may appeal to the government, proponents of the crypto world argue that it goes against interoperability, which could hinder expansion.