- The Governor of RBI, Shaktikanta Das, has given a clear warning to crypto investors, whose numbers are doubling in India with every passing month.
- However, the government agencies including RBI and Finance Ministry are sceptical towards private digital currency.
- Previously, T.V. Somanathan, the finance secretary for the Indian government, made it clear that private cryptocurrencies like Bitcoin have no future in India.
- In the budget speech, the Finance Minister announced a 30 per cent tax on any income from the transfer of virtual digital assets, specifying that no deductions and no exemptions will be allowed.
The Governor of RBI, Shaktikanta Das, has given a clear warning to crypto investors, whose numbers are doubling in India with every passing month. Although he did not negate the underlying technology and use cases, the warning was limited to private cryptocurrencies. The RBI is looking to launch Central Bank Digital Currency (CBDC), a programmable currency with a variety of use cases, especially for MSMEs.
However, the government agencies including RBI and Finance Ministry are skeptical towards private digital currency.
“As far as cryptocurrencies are concerned, the RBI stance is very clear. Private cryptocurrencies are a big threat to our financial and macroeconomic stability. They will undermine RBI’s ability to deal with issues related to financial stability. I think it is my duty to tell investors that when they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset)… not even a tulip,” said Das in a press conference following the policy rate decision.
The digital currency is being launched by RBI to ensure the prerogative of the government as the sole authority to launch currency is not breached and India can also take the benefits of CBDC use cases.
The RBI will have to go through the usual route of startups to launch a digital currency. The proof of concept (PoC) and small scale deployment to know the use cases. The Indian Central Bank is taking a big leap through various initiatives like a separate fintech unit and now a digital currency with very specific use cases to solve India centric problems.
Previously, T.V. Somanathan, the finance secretary for the Indian government, made it clear that private cryptocurrencies like Bitcoin have no future in India. Somanathan said that a digital Rupee backed by the Reserve Bank of India, or RBI, will be accepted as legal tender, but major cryptocurrencies have no chance of doing so. He added, “Rest all aren’t legal tender, will not, will never become legal tender. Bitcoin, Ethereum or NFT will never become legal tender…You can buy gold, diamond, crypto, but that will have not the value authorization by government.”
If private cryptocurrency owners and investors still had any doubts about the government’s intentions, here’s what the finance secretary also had to say: “People investing in private crypto should understand that it does not have the authorization of government. There is no guarantee whether your investment will be successful or not, one may suffer losses and government is not responsible for this.”
In the budget speech, the Finance Minister announced a 30 per cent tax on any income from the transfer of virtual digital assets, specifying that no deductions and no exemptions will be allowed. She said, “Any income from virtual digital assets is taxable at 30 per cent. There will be no deduction with exception of the cost of acquisition. The TDS is applicable beyond a specified monetary threshold, and the gift of virtual currencies is taxable in the hands of the recipient.”
Within the last few weeks, the crypto investors who were looking for a bright future in anticipation that cryptocurrency will have a number of use cases, this will have a value without having storage value or legal currency, looks bleak. It is no longer viable, leave alone profitable, to keep holding on to crypto coins. Their demise in India is now imminent, and it’s time for all holders and investors to get the baggage off their backs as soon as possible.
