Virendra Pandit
New Delhi: Reserve Bank of India (RBI), which plans to launch the country’s digital currency this year, said on Thursday that privately floated cryptocurrencies are not only worthless as they have no underlying value, but could also pose a threat to the country’s financial stability.
RBI Governor Shaktikanta Das reiterated private cryptocurrencies pose an enormous threat to India’s macroeconomic stability as well. They can also undermine the central bank’s ability to deal with financial stability issues.
He cautioned investors in cryptocurrencies that they do so at their own risk.
After a meeting of the Monetary Policy Committee (MPC), Das told reporters that investors in cryptocurrencies, which claim to have a currency-like character, should also keep in mind that they do not have any underlying value, “not even a tulip”.
In the FY23 Union Budget, Finance Minister Nirmala Sitharaman had said the magnitude and frequency of transactions in virtual assets have made it imperative to provide for a specific tax regime. She said the government will tax any income from transferring any virtual asset at the rate of 30 percent.
Also, the government proposed to provide for Tax Deduction at Source (TDS) for payment made in relation to transferring digital assets at the rate of 1 percent, to capture the transaction details.
On the proposed digital rupee, Das said the RBI is moving cautiously and cannot give a specific timeline.
RBI Deputy Governor T Rabi Shankar said the proposed digital rupee would be the same as a normal paper rupee and a one-to-one convertible.
“Only its form will be electronic or digital. One can use it on a cell phone. There will be no difference between the physical and digital rupee,” he said, adding that the RBI will issue it and it will be part of the central bank’s liabilities.