A former deputy governor of the Reserve Bank of India (RBI) has spoken out on the country’s financial and crypto ecosystem, stating that digital assets must be accepted.
Rama Subramaniam Gandhi said at the first Hodl 2021 virtual conference organized by the Blockchain and Crypto Assets Council of the Internet and Mobile Association of India on Tuesday that crypto could be used for payments for economic activities, but he sees it more as one Enrichment class.
The regulatory situation in India is still unclear, bills and laws are still being discussed by politicians. Earlier this month, the government announced that it was working on a bill to define cryptocurrencies as goods on which they could be taxed. If passed, they could not be used for payments but instead traded and invested as assets.
The central bank banned all commercial banks from allowing their customers to conduct cryptocurrency-related transactions in 2018, but the ruling was overturned by the Supreme Court of India in February 2020.
Gandhi, who worked at the central bank from 2014 to 2017, claims that cryptocurrency should be treated as an asset or commodity and taxed accordingly. Developing a regulatory framework and addressing it would enable Indians to invest and hold digital assets. If the assets were mined rather than bought, they should be subject to capital gains tax, he added.
“Cryptocurrencies should be paid for using normal payment channels. If this is not the case, it is considered to be dismantled and capital gains tax must be levied. It’s like voluntary disclosure. “
The former central banker suggested that cryptocurrencies would be used for crime if there were no regulations or government oversight. He said transactions could be tracked through a central repository to facilitate trade and prevent illegal use.
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Gandhi stated that the government should be open to economic transactions in cryptocurrencies, but warned about the anonymity features of some blockchains, adding that society must adhere to all compliance rules set by the state:
“A state will always want to give its citizens freedom in economic transactions. It enforces contractual obligations and taxes income and profits. Hence, any economic activity should be accessible to this kind of thing. ”