The ex Reserve Bank of India (RBI) deputy governor Rama Subramaniam Gandhi has spoken out on the country’s financial and cryptocurrency ecosystem, stating that digital currencies need to be embraced.
On Tuesday, Rama Subramaniam Gandhi, talking at the inaugural Hodl 2021 online meeting held by the Blockchain and Crypto Assets Council of the Internet and Mobile Association of India, stated that digital currency could be used for payments for business activities, but he perceives it more as an asset class.
The legal environment in India is far from certain, with legislators constantly debating proposals and laws. However, the administration stated previously this month that it was developing a draft bill that would classify cryptocurrency as commodities that could be taxed. If approved, they would be traded and invested in as assets rather than utilized for payments.
In 2018, the central bank prohibited all commercial banks from enabling their clients to conduct digital currency transactions; nevertheless, the Supreme Court of India reversed the decision in February 2020.
Gandhi, the governor of the central bank from 2014 to 2017, believes that bitcoin should be recognized as an asset or commodity and taxed as such. Indians would be able to invest in and keep digital assets if a regulatory system was developed and treated as such. He noted that if the assets were mined rather than acquired, they should be liable to capital gains tax.
“Cryptocurrencies should be paid for through normal payment channels. If they are not, it should be deemed mined, and capital gains tax must be levied. That is like voluntary disclosure.”
If there are no rules or government monitoring, the former central banker believes that cryptocurrency will be utilized for criminal activity. To promote commerce and avoid illegal usage, he suggested transactions could be recorded through a single repository.
Gandhi remarked that the government should be open-minded regarding commercial transactions using digital currencies but warned against the anonymity characteristics that certain blockchains provide, noting that society must follow any state-imposed guidelines:
“A state will always want to give freedom to its citizens in terms of economic transactions. It enforces contractual obligations and taxes income and gains. So, any economic activity should be amenable to these kinds of things.”