Snippet Learning Archives - Indian Economy

RBI stand The RBI always argued for banning crypto assets because of the risk they are pausing to the financial system. Cryptos doesn’t have any underlying assets (except in the case of stable coins and to an extent the fancy priced NFTs). Simply, they are junk assets getting their value from the buying and selling sentiments of the people. The heaviest risk is that crypto currency investment will not yield anything if some burst in the prices of cryptos you invested. Cryptos assets are threat to financial stability. Financial stability means the financial institutions, financial infrastructure and platform remain safe and health without undergoing any crisis. This means that given the high volume of investment, frequency of investment etc. it demands conversion of rupee into dollar then into cryptos and vice versa. Any crash in the market will phase out the exchanges, intermediaries etc. making investors at the losing side. Crypto assets and not legal tender money. This means that they will not get any government guarantee on their value. To avoid the risks of cryptos, the RBI will issue a Central Bank Digital Currency. Government stand The government has the right to tax income from crypto investments. Tax ratification doesn’t mean that the government has legalised crypto as assets. People investing in crypto assets are doing so on their own risk. Status quo: the government has not banned crypto assets as demanded by the RBI. Rather, in the budget, imposition of a penalising high tax rate of 30% is an indication that the government doesn’t support crypto space. Indeed, there are confusion and dilemma in regulating the crypto assets. Creating a regulation will be almost impossible given that they are cross national, extended over several digital trading platforms and engage in non-transparent dealings. *********

Category: Snippet Learning

Government and RBI position on crypto assets

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