India’s central bank says government cannot ignore its concerns over crypto

Indian officials, aligned with the RBI, say the regulator has not changed its stance on crypto emphasizing an outright ban.

The Reserve Bank of India (RBI) remains convinced that cryptocurrencies should be banned.

The officials, who spoke on the condition of anonymity, told Indian newspaper Hindustan Times that treating crypto assets as regulated entities may not have significant upsides.

They suggest that, at best, they should be treated akin to gambling instruments.

Although the Indian government is engaged with crypto businesses on the matter, the RBI noted that the government cannot ignore concerns around digital currencies.

“The government cannot sidestep the RBI’s concerns while deciding on cryptocurrencies, as it is responsible for monetary stability in India and maintains price stability.”

An unnamed RBI official

While the fate of crypto in India remains uncertain, entrepreneurs in the sector are grappling with challenges imposed by local regulators. The implementation of a 30% tax on crypto profits and a 1% tax deduction at the source (TDS) on all transactions has led to a significant decline in traffic on crypto exchanges.

In mid-September, Nischal Shetty, CEO of the Indian cryptocurrency exchange WazirX, indicated that the much-needed tax relief on crypto transactions in India is still years away, with authorities likely to maintain the 1% TDS until 2025. Shetty particularly emphasized that there were “no formal discussions” between the industry and lawmakers on the matter.

At the same time, Sumit Gupta, the head of another Indian crypto exchange, CoinDCX, said his firm was in talks with the government to reduce TDS from 1% to 0.01%, though he did not disclose the timetable for the update.

In October 2022, WazirX navigated the crypto market downturn by reducing its workforce by 40%, with 60 employees out of 150 affected. About a year later, in August 2023, CoinDCX also downsized its staff by 12%, citing the prolonged bear market and changing tax policies that impacted its revenue.