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Bitcoin investment in India: The need for cryptocurrency to be treated as an asset, says former RBI DG

In the list of vouching names for cryptocurrency, a new entrant is former RBI deputy governor R Gandhi, who said that cryptocurrency Once stated as property or commodity, can be used to pay for economic activities, season shopping goods and services.

Gandhi was speaking at the inaugural session of HODL-2021, India’s first crypto-asset conference, organized by the Blockchain and Crypto Assets Council (BACC) of the Internet and Mobile Association of India. In support of cryptocurrency, Gandhi said, “It is a legitimate legal activity.” Over the past few months, some favorable developments and acceptance of cryptocurrency across the globe have boosted sentiment and led to a sharp rally in cryptocurrency prices. Clearing the fog around the regulatory framework and paving the way forward, Gandhi said that cryptocurrencies should be treated as an asset and taxed based on its payment channels. “Upon entry into the hand of a citizen, crypto should be treated as a foreign asset. Then, it must be paid for through normal channels when it is purchased, if not, it will be considered mined, and capital received. And a heavy tax will be levied. Then if it turns out to be mined, capital is received and a slightly lighter tax is levied. It must be tracked completely through a depository or store of information. Then the exchange trades. Can facilitate- buy and sell and settle payments and receipts,” Gandhi said.

Gandhi also clarified that once a large section of people start using crypto assets as an average payment, it will be a matter of concern for monetary authorities. After large companies, countries and influential people have come in favor of cryptocurrency, countries that were against it are also trying to build a framework for it. According to several media reports, the Indian government is looking to define cryptocurrency as an asset or commodity. It may also offer a way to define cryptos according to their use cases such as payment, investment or utility. Expressing his concern about possible monetary transmission using crypto, Gandhi said, “The question would then arise whether monetary transmission using crypto would be possible or not. Right now it is not very clear. Here, we will talk about it.” I can keep an open mind on how monetary transmission will take place through crypto assets as well. I have no research to confirm this, therefore, I believe crypto assets will also be sensitive to monetary action.”

Recently, former RBI governor and a top economist Raghuram Rajan, while speaking about the potential future of cryptocurrency, said that cryptocurrency may have a “potential future”.

Rajan seemed optimistic about well-regulated stablecoins, which are digital currencies tied to an underlying asset such as currency or gold. However, he advocated suitable regulations for such properties. Highlighting the origins of cryptocurrency, Gandhi said, “Basically, it came out of distrust about authoritarian currency, and in a sense, the philosophy was for some anarchist disruption. The idea was that it was a penny, Which cannot be taxed or tracked. After this, the principles have completely changed, including in India. Now, more and more people are believing in it and they want to deal with it legally.”

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