Former Reserve Bank Official Pushes India To Accept Crypto

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A former Deputy Governor of the Reserve Bank of India (RBI) has spoken out on the country’s financial and crypto ecosystem and said digital assets must be accepted.

Speaking on Tuesday at the inaugural Hodl 2021 virtual conference hosted by the Blockchain and Crypto Assets Council of the Internet and Mobile Association of India, Rama Subramaniam Gandhi said crypto could be used for payments for business activities, but he sees them more as an asset class.

The regulatory situation in India remains uncertain, with bills and legislation still being debated by politicians. Earlier this month, the government announced that it was working on a bill to define cryptocurrencies as commodities where they could be taxed. If passed, it would not allow them to be used for payments, but to be traded and invested as assets instead.

The central bank banned all commercial banks from allowing their customers to conduct cryptocurrency-related transactions in 2018, however, the ruling was overturned by the Supreme Court of India in February 2020.

Gandhi, who served at the central bank from 2014 to 2017, argues that cryptocurrency should be treated as an asset or a commodity and taxed accordingly. Developing a regulatory framework and treating it as such would allow Indians to invest and own digital assets. If the assets were mined instead of purchased, they should be subject to capital gains tax, he added.

Cryptocurrencies must be paid for through normal payment channels. If they are not, it should be considered mined and a capital gains tax should be levied. It’s like voluntary disclosure.

The former central banker estimated that cryptocurrencies would be used for crimes if there was no government regulation or oversight. He said transactions could be tracked through a central repository to facilitate trade and prevent illicit use.

Related: Indian Government Rethinks Crypto Ban

Gandhi said the government should have an open mind towards economic transactions involving cryptocurrencies, but cautioned against the anonymity characteristics of some blockchains, adding that the company must adhere to all compliance rules. set by the State:

A state will always want to give freedom to its citizens in terms of economic transactions. It enforces contractual obligations and taxes income and earnings. So any economic activity should be suitable for this sort of thing.

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