The government does not maintain information on the exit of start-ups, including crypto start-ups, the Commerce & Industry Ministry stated in the Rajya Sabha on Friday.
The information was shared in response to a question posed by RS member Derek’O Brien on whether the government had taken note of the crypto start-ups exiting Indian markets. He also asked for reasons for the exit and its impact on the Indian economy.
In his reply, Minister of State for Commerce & Industry Som Parkash said the government did not maintain information on the exit of start-ups but added that the RBI had been cautioning users, holders and traders of virtual currencies through public notices that dealing in such currencies is associated with potential economic, financial, operational, legal, customer protection and security related risks.
The question on the exit of crypto start-ups is significant as some analysts have observed that with the government recently mandating that profits from crypto transactions would be subject to 30 per cent taxation and 1 per cent TDS will apply on all crypto transactions, some crypto start-ups may want to fold up operations.
RBI’s concern
In his reply, the Minister said the RBI had registered its concern over the adverse effect of cryptocurrency on Indian economy.
“The RBI mentioned that cryptocurrencies are not a currency because every modern currency needs to be issued by the central bank / government…the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored, so it will have a de-stabilising effect on the monetary and fiscal stability of a country,” he said.