Govt to ban cryptocurrencies in India? FM Nirmala Sitharaman replies

Finance Minister Nirmala Sitharaman on Friday said the government will take a decision on "banning or not banning" cryptocurrencies after consultations. 

Speaking during the ongoing Budget session of Parliament, she stated that the government's move to impose a 30 per cent tax on gains from virtual currencies has nothing to do with the legality of private cryptocurrencies in the market. 

The finance minister added that the government has the sovereign right to tax profit from cryptocurrency transactions. 

Also Read: Budget 2022: Meme fest on Twitter as FM Sitharaman announces crypto tax

"Banning or not banning cryptocurrencies will come subsequently after consultations," FM Sitharaman said while responding to the Budget debate in Rajya Sabha. 

"Not doing anything to legalise or ban it at this stage," she stated on the government's decision to impose a 30 per cent tax on gains from cryptocurrencies. 

During her Budget speech, FM Sitharaman had announced the proposal of imposing a 30 per cent tax on gains made on cryptocurrency trades irrespective of the individual's income tax slab. Additionally, a one per cent tax deducted at source (TDS) will be applicable on transfer of such assets over a certain threshold. 

The cryptocurrency industry players also welcomed the announcement stating that it legitimises their trades. 

While announcing the monetary policy outcome on Thursday, Reserve Bank of India (RBI) Governor Shaktikanta Das said private cryptocurrencies are a threat to macroeconomic as well as financial stability and impair its ability to deal with challenges on two fronts. 

Also Read: Private crypto big threat to macroeconomic, financial stability: Shaktikanta Das

Warning investors, Das said such assets have no underlying value at all, "not even a tulip". The RBI Governor added that his "duty" is to caution investors telling them to bear in mind that they are investing at their own risk. 

Post Budget 2022, Finance Secretary T V Somanathan had said that cryptocurrency will never be a legal tender. Talking to PTI, Somanathan stated that just like gold and diamond, albeit being valuable, are not a legal tender, private virtual currencies too will never be a legal tender.