Instead of a ban, India now wants to tax crypto at 30% and make it legal tender

[Redaktion]

India has swung from an intention to ban all digital assets transactions in the country to a proposal to tax crypto with a 30% government cut on profits and issuing a digital rupee. According to analysts this arguably means that Indian officials are exploring the possibility of crypto becoming legal tender.

https://www.notebookcheck.net/Instead-of-a-ban-India-now-wants-to-tax-crypto-at-30-and-make-it-legal-tender.597400.0.html

[_MT_]

I don't get it. Surely, a digital rupee will be pegged to the real thing. In which case a 30 % tax would make no sense. But why go this route? If you want to make cashless payments easier and you want a solution backed by your central bank, what is wrong with offering free accounts to all citizens with no transaction fees, being able to open that account over the Internet, setting reasonable fees for businesses (or not if you want to subsidize the system completely - after all, state pays for printing money) and creating a software suite to facilitate transactions? Obviously, such a move would be unpleasant for commercial banks and payment processors. There is nothing efficient about cryptocurrencies. Their lure is their volatility (high risk, high reward), which is also their weakness that makes them poorly suited to act as a currency in an economy. A (decentralized) cryptocurrency might be interesting in a banana republic where you can't trust anyone. That's where the price of a cryptocurrency might be worth paying.

It's really foolish to propose heavy taxation if it can't be enforced. What exactly is going to stop me from operating a Bitcoin wallet somewhere abroad? It was the same with accounts in Switzerland. Except there is no government to pressure into compromising their laws in the case of Bitcoin. Of course, in order for a Bitcoin to be useful, it has to be tradeable. That's where regulations can hit it hard. But because it's not tied to any single country, you need global regulation. At least the major markets.