India's Finance Secretary Rejects Cryptocurrencies as Legal Tender

Cryptocurrency: A No-Go for Legal Tender in India

T.V. Somanathan, the Indian government’s finance secretary, is adamant that cryptocurrencies will not be used as legal tender in the country. In a recent statement, he emphasized that while a digital rupee issued by the Reserve Bank of India (RBI) will be recognized, major cryptocurrencies like Bitcoin and Ethereum are out of luck.

The Digital Rupee: Government’s Gold Standard

According to Somanathan, the digital rupee will have the support of the RBI, ensuring it won’t default, which is somewhat more assurance than we can get from our wait for the next big thing that turns out to be a hot air balloon. “Digital rupee issued by RBI will be a legal tender,” he affirms. Meanwhile, the rest, like Bitcoin, Ethereum, or even that cute NFT of a cat in a hat, are not legal tender, nor will they ever be.

Caveats for Crypto Investors

In what can be described as a virtual slap on the wrist, Somanathan warned potential crypto investors that their money doesn’t have a safety net built by the government. He said, “People investing in private crypto should understand that it does not have the authorization of government.” In other words, if you throw your cash into the crypto ocean, don’t expect the government to throw you a lifebuoy.

To Tax or Not to Tax? That is the Question

In another twist, Indian finance minister Nirmala Sitharaman announced plans for a central bank digital currency (CBDC) to launch by 2023, which is set to give a “big boost” to the digital economy. Coinciding with this announcement was the proposal to tax transactions involving digital assets at a hefty rate of 30%. So, while you might find joy in buying digital art or crypto, remember that a third of it might swiftly head to your friendly neighborhood tax office.

The Government’s Stance on Private Cryptocurrencies

While there have been hints of a private crypto ban in the past, the latest from the Indian Parliament is that the proposed legislation is on hold for now. Instead, lawmakers will be receiving some education about crypto and its impact on the economy, likely preparing them for potential future discussions—after all, who says learning can’t happen while sitting in a plush chair of power?

Conclusion: A Clear Message from the Government

Somanathan’s firm stance reinforces that for the Indian government, the only digital currency they will get behind is a state-backed solution. For now, anyone hoping to turn Bitcoin into a pile of cash will have to look elsewhere—as it stands, the only thing guaranteed in crypto is its lack of guarantees.