The debate surrounding cryptocurrencies in India is not new, but the RBI’s latest statement has brought it back into the spotlight. According to a Mint report, Deputy Governor T. Rabi Sankar has indicated that the option of a complete ban on cryptocurrencies is being considered. However, he also clarified that the final decision will rest with the government and that discussions with all stakeholders are necessary before any action is taken.
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Why the RBI Doesn’t Consider Crypto as Legal Tender
The RBI believes that it would be wrong to call cryptocurrencies real currency. According to the Deputy Governor, it is merely a form of digital code. Any currency requires a responsible issuer, a guarantee of payment, and a clear basis for its value. Crypto does not meet these standards, which is why the RBI does not classify it as a currency.
The Biggest Risk Hidden in Crypto Tokens
The biggest reason for the RBI’s concern is the lack of intrinsic value in cryptocurrencies. There is no promise of payment to investors, nor is any institution accountable for it. Its prices depend entirely on market speculation and supply and demand, leading to extreme volatility. This instability makes it risky.
Current Legal Status of Crypto in India
Currently, there is no complete ban on cryptocurrencies in India. Investment and trading are not outside the legal framework, but they are also not regulated under any specific law. The government considers it a high-risk asset, and for this reason, strict tax rules have been implemented.
Why Crypto Tax Has Become a Cause for Concern
In India, a flat 30 percent tax is levied on income from cryptocurrencies. In addition, a 1 percent TDS (Tax Deducted at Source) is deducted on every transaction. Importantly, there is no relief in tax rules even in the case of losses, making it an expensive proposition for many investors.
Why Young Investors Are Showing More Interest
The largest segment of crypto investors in the country consists of young people, especially those aged 18 to 25. A good understanding of digital platforms, trust in technology, and the expectation of qui
ck profits are attracting young people. However, the RBI sees this very group as being most at risk.
Why is the decision to ban crypto so complex?
The RBI says that taking a direct decision to ban it is not easy. It would affect crypto exchanges, the banking system, and millions of investors. The government will have to consider all aspects and hold discussions with all stakeholders before taking any concrete steps.
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Government reaps significant benefits from crypto
While crypto is considered risky, it has also generated substantial tax revenue for the government. According to data from the Ministry of Finance, approximately ₹1,100 crore in taxes have been collected from crypto exchanges in the last three financial years. Maharashtra contributed the most to this revenue.