Former Deputy Governor of the Reserve Bank of India pushes for Accepting Cryptocurrencies

Rama Subramaniam Gandhi, the former Deputy Governor of the Reserve Bank of India (RBI) during 2014-2017, said on September 7, 2021, during a virtual conference that India needs to accept digital assets.

While speaking about India’s financial and crypto ecosystem during HODL ’21 virtual conference, he said cryptocurrencies can be used for payment purposes for different kinds of economic activities. However, Rama Subramaniam Gandhi made it clear that he sees cryptos more as an asset class.

The HODL ’21 virtual conference has been organized by the Internet and Mobile Association of India’s (IAMAI) Blockchain and Crypto Assets Council (BACC). His comments came at a time when the regulatory environment surrounding digital assets still remains unclear.

The Government of India announced earlier this month that they are in the process of drafting a bill for defining cryptocurrencies as commodities. This will help the government to tax cryptos for taxation. Reports say that if the draft bill is passed, it’ll allow traders and investors to use cryptocurrencies as assets. However, it’ll not allow cryptos for being used as modes of payment.

The regulatory environment towards cryptocurrencies was hostile a couple of years back. In a 2018 circular, the Reserve Bank of India (RBI) asked banks and other financial entities to stop all kinds of businesses with cryptocurrency exchanges. However, on March 4, 2020, the Supreme Court of India set this order aside. In fact, in 2021 too, the apex court of India said that 2018’s RBI order became null and void after SC’s 2020 verdict.

The former Deputy Governor Rama Subramaniam Gandhi still maintains that cryptos must be treated as an asset or commodity and should be taxed accordingly.

A regulatory framework for cryptocurrencies would allow citizens of India to trade, invest, and hold cryptos. He went on to add that these digital assets must be subject to capital gains tax if the cryptos are not purchased but mined. Rama Subramaniam Gandhi said:

“Cryptocurrencies should be paid for through normal payment channels. If they are not, it should be deemed mined, and capital gains tax must be levied. That is like voluntary disclosure.”

The former central banker said that the anonymity of transactions makes cryptocurrencies one of the most viable ways for criminals and other shady entities to use cryptos for crimes and all kinds of illicit uses. He advised that these kinds of illicit transactions can be traced by the government through a central repository.

The former deputy governor urged the Indian government to have an open mind toward cryptocurrency-based economic transactions. Having said that, he also pointed out that society should adhere to the compliance rules set by the government.

He signed off by saying:

“A state will always want to give freedom to its citizens in terms of economic transactions. It enforces contractual obligations and taxes income and gains. So, any economic activity should be amenable to these kinds of things.”

 

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