Cryptocurrency will never be a legal tender, says Finance Secretary

New Delhi, February 3

Cryptocurrency will never be a legal tender, Finance Secretary TV Somanathan said on Thursday clearing the air on the legality of private digital currencies in the market.

The 2022-23 Budget has given a clarity on taxation of virtual digital assets and proposed to impose a 30% tax on gains made on such trades, besides subjecting crypto transactions, beyond a threshold, to 1% TDS.

In an interview, Somanathan said just like gold and diamond, despite being valuable, are not a legal tender, private cryptocurrencies too will never be a legal tender.

“Crypto will never be a legal tender. Legal tender means by law it is accepted in settlement of debts. India will not be making any crypto asset as a legal tender. Only ‘Digital Rupee’ of the Reserve Bank will be a legal tender in India,” Somanathan said. Except El Salvador, which in September last year adopted Bitcoin as legal tender, no other country has made crypto a legal tender.

India is working on legislation to regulate cryptocurrencies, but no draft has yet been released publicly.

In the meanwhile, a central bank-backed digital currency will start circulating in the next fiscal to usher in cheaper, more efficient currency management.

From April 1, 30% tax will have to be paid on income from cryptocurrencies. Income tax return form from next year will have a separate column to declare gains from crypto.

Asked why the government has not listed private crypto regulation Bill for the ongoing Budget session, despite listing it in the previous Winter Session in December, Somanathan said “it was felt that wider consultation is necessary before the legislation is brought on what should be the nature of regulation, should there be a regulation or should it be only taxation”.

The government had listed for introduction the ‘Cryptocurrency and Regulation of Official Digital Currency Bill’ for regulating cryptocurrencies in the previous session of Parliament. The Bill comes amid concerns over such currencies being allegedly used for luring investors with misleading claims. — PTI

ONLY ‘DIGITAL RUPEE’ WILL BE LEGAL

Crypto will never be a legal tender. Only ‘Digital Rupee’ of the RBI will be a legal tender in India. — TV Somanathan, Finance Secretary