Cryptocurrencies like Bitcoin or Ethereum will never become a legal tender, Finance Secretary TV Somanathan told ANI adding only the digital rupee issued by the Reserve Bank of India (RBI) would be the legal tender.
Speaking to ANI, Finance Secretary said, “Digital rupee will be backed by RBI which will never default. Money will be of RBI but the nature will be digital. The digital rupee issued by RBI will be the legal tender. We can purchase non-digital assets with the digital rupee like we purchase an ice cream or other things using our wallet or payments through UPI platform.”
“Rest all are not legal tender, will not, will never become legal tender. Bitcoin, Ethereum, or any picture of Actor become NFT will never become a legal tender,” he added. Bitcoin price in India as of 6:49pm IST stood at Rs. 30.84 lakh, while Ethereum price in India stood at Rs. 2.23 lakh.
Somanathan said that crypto assets are assets whose value is determined between two people, you can buy gold, diamond, and crypto assets, but that value will not have authorisation by the government.
People investing in private crypto should understand that it is not having the authorisation of the government. There is not any guarantee that your investments will be successful or not, one may lose money and the government is not responsible for this, he said.
Finance Secretary clarified that the things which are not legal don’t mean that they are illegal.
“I am not saying that Bitcoin or Ethereum is illegal, but that is not illegal too. But I can say that if regulation comes for cryptocurrency then also it will not be a legal tender,” said Somanathan.
Somanathan said that regulation may seek KYC, seller’s license, but it will be decided by the government later with wide consultation with stakeholders. We will also see what is happening in other countries, he said.
Elaborating more on the digital rupees, Somanathan said that the digital rupee will not be like Bitcoin and Ethereum.
Somanathan further said, “Through digital rupee, you do your transaction like what currently you are doing through your digital wallets like Paytm, UPI. The digital rupee is a legal tender and equivalent to cash payments we do.”
Finance Secretary also clarified about the 30 per cent tax rate on digital assets transfer. He said except for agriculture any other income is taxable as per the government policy.
“Currently we don’t have clarity on cryptocurrency, whether it is business income, capital gain or it is a speculative income. Some people declare their crypto assets, some do not. Now from April 1, 2022, a uniform rate of 30 per cent tax will apply on the transfer of digital assets,” he said.
“This is not only for crypto, this is for all speculative income. For example, if I take horse racing, that also attracts 30 per cent tax. There is already 30 per cent tax on any speculative transaction. So we have decided to tax crypto at the same rate. Crypto is a speculative transaction, so we are taxing it at a 30 per cent rate,” said Somanathan.
“No one knows the real value of Ethereum. Their rate daily fluctuates. One who earns income through crypto will have to pay now 30 percent. This is the new policy of the government,” he added.