In Brief:
- Cryptocurrency to be treated & taxed as an asset will never be legal tender.
- The Finance Secretary clarified that things that are not legal do not necessarily mean that they are illegal.
- Digital Rupee backed by RBI would be the only digital legal tender.
In a press conference, Finance Secretary stated that Bitcoin, Ethereum, or NFTs Will Never Become Legal Tender in India.
He further stated, “Digital currency will be backed by the RBI and will never default. Money will be from the RBI but 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.”
As per the Finance Secretary, crypto assets are assets whose value is determined between two people; further weighing it with the value of gold, diamonds; specifying that crypto assets will not have authorization of the government.
“Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender,” stated the secretary.
The Finance Secretary stated “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”, thereby clarifying the legality stance of the government.
He further said that people who invest in private crypto should be aware that it does not have government approval and that there is no guarantee that their investment will be successful or not. Losses may occur, and the centre is not liable for them.
Adding to this, he stated that the regulation may require KYC and a seller’s license, but that this will be decided by the government after extensive consultation with stakeholders and looking at what’s going on in other countries.
This clarification by Finance Secy comes after the recent budget read by FinMin in which a new clause defines the term “Virtual Assets” as NFTs or cryptocurrencies.
