Bitcoin, Ethereum, NFT will never become legal tender: Finance Secy

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Finance Secretary TV Somanathan on Wednesday said that cryptocurrencies like Bitcoin and Ethereum, or non-fungible tokens (NFTs) will never become legal tender.

“Bitcoin, Ethereum or NFT will never become legal tender. 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 authorisation by government,” news agency ANI quoted Somanathan as saying.

The secretary said that people who are investing in cryptocurrencies should understand that they don’t have authorisation of the government.

“There is no guarantee whether your investment will be successful or not, one may suffer losses and government is not responsible for this,” Somanathan said.

Finance Minister Nirmala Sitharaman during her Budget speech on Tuesday had announced that the Reserve Bank of India (RBI) would be rolling out its digital currency soon. Besides, she also said that all income from transfer of virtual digital assets will be taxed at 30 per cent.

Somanathan said that the digital currency will be backed by RBI and can never default. “Digital currency will be backed by RBI which will never be default. Money will be of RBI but the nature will be digital. Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender,” the agency quoted him as saying.

Explaining the rationale behind taxing income from virtual digital assets, the secretary said that the government taxes all speculative income at 30 per cent. He said horse racing and all other speculative transactions are taxed at 30 per cent. So the government decided to tax income from crytocurrencies also at the same rate.

“Crypto is a speculative transaction, so we are taxing it at a 30 per cent rate. No one knows the real value of Ethereum. Their rate daily fluctuates. One who earns income through crypto will have to now pay 30 per cent. This is the new policy of the government,” he said.

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