A day after Union Finance Minister Nirmala Sitharaman announced that the government will launch its own digital currency, Finance Secretary TV Somanathan stressed that it would be backed by the central bank and would be legal money.
“Digital currency will be backed by RBI which will never be the default. Money will be of RBI but the nature will be digital. Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender,” Somanathan told news agency ANI.
Somanathan went on to say that digital currency such as Bitcoin, Ethereum, and non-fungible tokens (NFTs) will never be considered legal cash in India.
“Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorization by govt,” he added.
The Finance Secretary went on to say that the government chose to tax cryptocurrency at a 30% rate since such transactions are extremely speculative. “No one knows the real value of Ethereum. Their rates fluctuate daily. One who earns income through crypto will have to now pay 30%. This is the new policy of the govt.”
Despite declaring a 30% tax on digital asset transactions, FM Sitharaman stressed that taxation did not imply that cryptos are now legal in India. Somanathan echoed this opinion, saying that investments in private crypto assets are not sanctioned by the government.
“What RBI will issue is a digital currency. Everything that prevails outside of it is assets being created by individuals & we are taxing profits made out of transactions of those assets, at 30%,” FM stated during the post-Budget news conference on Tuesday.