Crypto currencies such as bitcoins need to be considered as assets and not legal tender, a former RBI official said, in remarks that stand in sharp contrast to the central bank’s attempts to treat it as a digital currency.
Former RBI deputy-governor R. Gandhi on Tuesday made a case for treating and regulating crypto currencies as a separate asset class with a view to enabling governments around the world to effectively deal with illegal activities associated with virtual currencies.
He was speaking at an event organised by the Internet and Mobile Association of India on Tuesday.
If crypto currencies are accepted as assets, the rules governing commodity exchanges could apply and the coins could be used to pay for goods and services, Gandhi said. “Then automatically people can start buying, selling and holding.”
After quite a lot of debate over the years, he said, people have fully understood that crypto cannot be a currency because the fundamental element of a currency — that it should be a legal tender — is missing in this case.
The general consensus among many policymakers is that it should be deemed as an asset, not as a currency, not as a payment instrument and not as a financial instrument as there is no clear identified issuer, he said.
“So once we have an understanding and acceptance, that it is an asset (not a currency), then it becomes relatively little easier to have regulation around it,” he said.
Last month, finance minister Nirmala Sitharaman had said the proposed legislation regarding cryptocurrency is pending before the cabinet.
Gandhi said the regulators should have access to information on how much crypto currencies individuals hold for income tax purposes.