Reiterating his long-standing position on private cryptocurrencies, the Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said that private cryptocurrencies pose a big threat to India’s macroeconomic and financial stability and they can undermine the central bank’s ability to deal with financial stability issues.
He also cautioned people who are investing in cryptocurrencies that they are doing so at their own risk and there is no underlying value in such assets.
At the post policy meeting with media persons, Governor Das said, the investors who invest in cryptocurrencies should keep in mind that they are doing so at their own risk. They should also keep in mind that cryptocurrencies do not have any underlying, not even a tulip.
Private cryptocurrencies are a big threat to our macroeconomic and financial stability. Cryptos which have currency-like character will undermine RBI’s ability to deal with financial stability issues, he said.
This comes after the government’s move to tax gains made on crypto transactions by investors at 30 per cent. Many in the industry viewed this as a sign of the government softening its stance on such assets and not banning it outrightly, although a 30 per cent tax on income was a bit on the higher side, many had opined. However, they were happy with the fact that atleast the government is warming to the idea of this asset class.
In this year’s union budget, finance minister Nirmala Sitharaman had said, the magnitude and frequency of transactions in virtual assets have made it imperative to provide for a specific tax regime. Accordingly, she said, any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. Also, the government has also proposed to provide for Tax Deduction at Source (TDS) for payment made in relation to transfer of virtual digital assets at the rate of 1 per cent, in order to capture the transaction details.
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