Crypto will not be a legal tender in India clarifies finance secretary

In an interview with PTI, finance secretary, T V Somnathan, clarifies that crypto will not be a legal tender in India.

Background of cryptocurrency in India

The transaction in cryptocurrencies is a matter of dispute in India ever since its popularity. It is because it is unmoderated. Before this statement, the union budget 2022 imposes tax at 30% on transaction of cryptocurrencies.

India is working to define a legal framework for the transaction of private cryptocurrencies. A draft outlining legalities is in the waiting queue. Cryptocurrency and Regulation of Official Digital Currency Bill was presented in the previous session of the parliament. Although, it is stay put for the current session. Currently, there is no ban on private cryptocurrencies.

What is a legal tender?

A legal tender means that it is acceptable to settle debts. Until now, El Salvador is the only country to accept cryptocurrencies as legal tenders. As per the government, only the central bank of a country controls currencies. He compares the cryptocurrencies with precious metals like gold to suggest that crypto will not be a legal tender in India.

RBI will launch its digital currency, ‘digital rupee‘. Further, Somnathan says that digital rupee qualifies for a legal tender.

It is important to note that cryptocurrencies retain the title of virtual digital assets. Although these are not transactable as currencies. Moreover, now after the declaration comes from the finance secretary himself, it does not qualify for being a legal tender.

 

Changes in the status of cryptocurrencies concern their investors in India.