So, how legit are cryptos, NFTs?

The law allows a sovereign to tax income from all businesses, irrespective of whether these are legal like banking or manufacturing, illegal such as gold smuggling, or cryptocurrency trading, which lies in the regulatory twilight zone. Even the Internal Revenue Service (IRS) of the US federal government requires earnings from drug peddling and stolen property included in the tax returns of a self-employed person. Rarely, however, does a government introduce a specific provisioning in the Finance Bill of the Union budget to bring an activity - here, dealings in virtual digital assets like cryptocurrencies and non-fungible tokens (NFTs) - under the tax net even while keeping alive the possibility of an outright ban in future. To the world at large, a fairly explicit plan to tax and track an activity lends, even if misleadingly, a sort of legitimacy.

While Nirmala Sitharaman's decision to tax crypto trading gains as lottery prize money cannot be questioned on technical grounds, it once again brings to the fore the curious functioning of the state and its inability to arrive at a stand on cryptos even after almost two years of the Supreme Court ruling that lifted a ban by RBI and sparked the crypto rally in India. As the tax department goes about with its business, GoI has to figure out if there is a midway between a complete ban as preferred by RBI and a regulated crypto trading. Till then, more than 15 million investors would be left to their own devices in a market functioning round the clock.

Letting ambiguity and uncertainty linger around a complex and volatile asset that has caught the fancy and attracted thousands of crores is risky. The legitimacy of cryptos should be settled once and for all. The quicker the better.