After Finance Minister Nirmala Sitharaman announced that RBI will launch a digital Rupee in her budget speech yesterday, Finance Secretary TV Somanathan has confirmed that India’s digital currency will be backed by the Reserve Bank of India which will be the only legal digital currency in the country. In a post-budget briefing in Delhi on Wednesday, the North Block official said that the money will be issued by the RBI but the nature will be ‘digital’. He also added that other digital currencies or cryptocurrencies will never become legal tender in the country.
“Digital rupee issued by the RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender” he said in the press conference. Somanathan has advised that other cryptocurrencies like Bitcoin, Ethereum or NFT will never become legal tenders. Instead, these cryptocurrencies will be considered as assets where investments can be made. “Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorization by the government” he added.
Secretary Somanathan further said, “People investing in private crypto should understand that it does not have the authorisation of the government. There is no guarantee whether your investment will be successful or not, one may suffer losses and govt is not responsible for this”. While making the government’s stance clear on the issue, the FM had announced in her budget that an RBI-issued ‘Digital Rupee’ will be introduced as a digital currency, and the government will levy a 30 per cent tax on gains made from any other private digital assets from April 1, 2021.
Taking a definite stand on the cryptocurrency issue, Central Government’s Budget 2022-23 stands out by regulating digital currencies while charging a 30% tax on income generated through it. Whilst, it has been now confirmed that other currencies will not have legal tender, the Digital rupee backed by RBI will stand as the only legal digital currency in the market.