Future of Cryptocurrency in India in view of the Regulatory Framework
India is the fastest growing cryptocurrency market in the world. However, there is lot of confusion and ambiguity over the Future of Cryptocurrency in India as well as with the concern whether the cryptocurrency in India is legal or not.
Cryptocurrencies are unregulated in India but in Budget 2022, the government announced a flat 30 per cent tax on gains from cryptocurrency transactions as well as a tax deduction at source (TDS) of 1 per cent.
Reserve Bank of India is of the view that cryptocurrency should be banned. It has made its stand clear. The government believes that till legislation or regulatory framework is formed around it, it should be taxed.
Taxation of Cryptocurrency by Government of India has given some hope that in the coming time or possibly in the next Budget of 2023, cryptocurrency may be given some Legal sanctity by the Govt. However, till Government of India provides a legal or regulatory framework for Cryptocurrency, the same shall be treated as illegal. The mere fact that that Government has started to levy Income Tax on Cryptocurrency profits, does not provide it any legal cover.
WHAT RBI AND GOVT OF INDIA IS SAYING ABOUT CRYPTOCURRENCY ?
RBI has been vehemently opposing cryptocurrencies. Governor Shaktikanta Das has on more than one occasion maintained that cryptocurrencies are a danger to the country and that anything whose value is derived solely from conjecture is speculative in nature. RBI identified a number of risks related to the cryptocurrency asset markets, including connections between such markets and the regulated banking system.
In a written reply to Lok Sabha, finance minister Nirmala Sitharaman had said that RBI is in favour of banning cryptocurrencies and that it has conveyed to the ministry that it cannot be considered as a legal tender since they are not issued by the RBI. “In view of the concerns expressed by the RBI on the destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited,” Sitharaman’s reply to the Lok Sabha says.
Future of Cryptocurrency in India
As already said that India is the fastest growing cryptocurrency market in the world. The success of cryptocurrency across the globe will largely depend whether Cryptocurrency is made legal in India or not. The future of Cryptocureency in India will eventually decide the future of cryptocurrency across the world.
Cryptocurrency ecosystem will not succeed till India becomes a part of this ecosystem.
Let us hope that Government of India in its Budget for 2023 will come out with a Legal and Regulatory framework for Cryptocurrency as has been suggested by the Reserve Bank of India to the Government.
One thing is certain that if Cryptocurrency is made legal in India, the regulatory body for the same would be Reserve Bank of India. To know,how soon this will happen, we will have to wait till Budget 2023, which is scheduled on February 1, 2023
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Should RBI regulate cryptocurrency in India ? (indiatimes.com)
