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Regulatory uncertainty continues to hound India’s crypto industry as lawmakers continue to mull on legislation for the sector. A former Reserve Bank of India (RBI) Deputy Governor is urging the government to accept digital currencies as a new asset class but not necessarily as a currency that can be used for payments.
Former RBI Deputy Governor Rama Subramaniam Gandhi aired his stance on cryptocurrency during the HODL ’21 on September 7, a virtual conference organized by the Blockchain and Crypto Assets Council (BACC), which is a part of the Internet and Mobile Association of India (IAMAI).
The former central banker stated that people have realized over the years that crypto is not a currency because it is not a legal tender, according to the New Indian Express. As such, one cannot compel another person to accept crypto as a means of payment.
Among Indian policymakers, the general consensus is that crypto is an asset but can’t be treated as a payment instrument or currency, according to Gandhi. “So once we have an understanding and acceptance, that it is an asset (not a currency), then it becomes relatively little easier to have regulation around it,” he explained.
The former RBI executive believes that crypto can be treated as an asset or commodity and should be taxed accordingly, Cointelegraph reported. The government announced a draft bill earlier this month that would define digital currencies as commodities. Once passed, it would allow Indians to invest and hold crypto as it would now be under the purview of commodity laws.
The former RBI Deputy Director also expressed concerns about the use of crypto in criminal activities. “So that is where the real difficulty comes in vis-à-vis a crypto assets as there is a possibility, and not really a possibility, there has been quite a bit of an anecdotal evidence that crypto assets have been utilized for increasingly, or in large scale, for illegal activities like ransom attacks, etc,” he said.
However, he acknowledged that crypto is anonymous and independent in nature by design but opined that every society can make its own rules as far as taxation and traceability are concerned. “So the very idea of crypto was that it should be anonymous, independent, and it cannot be taxed or tracked, so as I said every society will have its own rules, which expects compliance by all its members and it penalizes non-compliance,” the former central banker said.
