Does India want to ban cryptocurrencies or tax them?

Cryptocurrencies have been witnessing turbulence since the very start. Despite the worries, blockchain-based currencies have been witnessing growing demand. We can’t be sure if it’s due to the incessant ads on TVs, actual interest in the technology behind it, or plain old FOMO. The volatility of cryptocurrencies makes them riskier than most assets and investments. However, the returns could also be surprisingly good. The Indian govt also seems to be having a tough time deciding the fate of cryptos.

RBI’s stance on Cryptocurrency

On Monday, Reserve Bank of India’s deputy governor T Rabi Sankar said something disheartening for crypto investors. The governor shared his view that cryptocurrencies should be banned and that it is the most advisable choice for the government.

“We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated & found that none of them stands up to basic scrutiny,” Sankar told ANI.

Sankar went as far as calling it worse than a ponzi scheme. He said, “We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to ponzi schemes, and may even be worse.”

This comment from the Deputy Governor of RBI comes just days after Shaktikanta Das equated cryptocurrencies with one of the worst economic bubbles of all time. He compared cryptocurrencies to Tulip Mania. A phenomenon recorded in the 17th century when Tulips had suddenly become prized possessions. The price of tulips was more than a couple of months’ wage for many people.

Das said, “Private cryptocurrencies or whatever name you call it are a threat to our macroeconomic stability and financial stability. They will undermine the RBI’s ability to deal with issues of financial stability and macroeconomic stability.”

Govt’s stance on Cryptocurrency

While the RBI seems to stand in unison when it comes to the prospects of cryptocurrency, the Finance Ministry has shown some interest in it by announcing a new tax regime. During the Budget 2022 speech, Finance Minister Nirmala Sitharaman announced a crypto tax of 30 percent. As sizeable a cut it is, this gave cryptocurrency exchanges a whiff of much-needed fresh air. Many exchanges applauded the govt’s move. Read their reaction to it here. They saw it as a way of gaining legitimacy. However, the recent comments from RBI decision-makers have sent them back to their brooding rooms.

BGR.in tried reaching out to a few prominent cryptocurrency exchanges in the country. However, a response is still awaited.

The govt is yet to announce a crypto regulation bill. It was tabled during the winter session last year. However, they ended up prolonging the process. The ministry is waiting to see how other countries are reacting to the decentralized currency. The fact that FM decided to introduce a digital rupee based on Blockchain tech, shows the govt is surely interested. However, the finance minister recently re-introduced the possibility of a ban on cryptos. She said the govt is yet to decide if cryptocurrencies need to be banned.

Fate of cryptocurrencies

The fate of the crypto ecosystem in India is still in limbo despite a new tax regime and India’s own Blockchain-based digital rupee. There doesn’t seem to be an end in sight to this almost decade-old debate about the existence of cryptos. Investors may have to continue to live with this uncertainty.

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