India's Crypto Stance: Not Banned, But Not Backed Either, Says Piyush Goyal

Union Minister Piyush Goyal, during his official visit to Doha, Qatar, to discuss trade and investment ties, also spoke on India's approach to cryptocurrencies. He highlighted that the government does not support digital assets that are not backed by the Reserve Bank of India (RBI) or a recognised local currency.

India's Stance on Crypto

The minister also stated that India's policy takes a balanced approach, encouraging technological advancement in digital finance by ensuring accountability and investor protection. "We have not been encouraging cryptocurrency, which does not have sovereign backing or is not backed by assets like the federal bank or local currency," Goyal told ANI at Doha.

Goyal also highlighted the government's stance on taxation and regulation of cryptocurrencies without sovereign backing. He added that while cryptocurrencies without central government backing are not banned, they are heavily taxed to discourage unregulated use. "As far as cryptocurrency, which is not backed by the Central Government, is concerned, while there is no ban as such, we are taxing it very heavily. We don't encourage it because we don't want anybody to be stuck at some point with a cryptocurrency that has no backing and nobody at the backend," he said.

India to Launch RBI-Backed Digital Currency

Goyal also mentioned that India plans to implement a digital currency backed by the RBI, which is expected to simplify transactions, reduce dependency on cash, and enable faster, traceable payments than existing banking procedures.

The minister stressed that India's approach ensures to protect investors from the risks associated with unregulated digital assets whereas encouraging innovation in the country's digital financial ecosystem.

In September, Reuters reported that government documents seen by them show the RBI finds cryptocurrency regulation difficult. The documents noted that giving full legitimacy to cryptocurrencies could make the sector systemic, while an outright ban may not stop peer-to-peer transfers or trades on decentralised exchanges.

Under India's current cryptocurrency regulations, gains from transfers are subject to a flat 30 per cent tax, while a 1 per cent Tax Deducted at Source (TDS) applies to transactions exceeding a specified threshold.