The former Deputy Governor of the Reserve Bank of India (RBI) has spoken out about the nation’s financial and crypto ecosystem and stated that digital assets need to be accepted.

Speaking at the inaugural HODL ’21 virtual conference organized by the Blockchain and Crypto Assets Council (BACC) of the Internet and Mobile Association of India (IAMAI) on Sept. 7, Rama Subramaniam Gandhi said that crypto could be used for payments for economic activities but he sees them more as an asset class.

The regulatory situation in India remains unclear with bills and legislation still being mulled by politicians. Earlier this month, the government announced that it was working on a draft bill to define cryptocurrencies as commodities where they could be taxed. If passed, it would not allow them to be used for payments, but traded and invested in as assets instead.

The central bank banned all commercial banks from allowing their customers to make cryptocurrency-related transactions in 2018, however, the ruling was overturned by the Supreme Court in February 2020.

Gandhi, who served at the central bank from 2014 to 2017, maintains that cryptocurrency needs to be treated as an asset or commodity and taxed accordingly. Developing a regulatory framework and treating them as such would allow Indians to invest and hold digital assets. If the assets have been mined instead of purchased, they should be subject to capital gains tax, he added.

“Cryptocurrencies should be paid for through normal payment channels. If they are not, it should be deemed mined, and capital gains tax must be levied. That is like voluntary disclosure.”

The former central banker opined that cryptocurrencies would be used for crimes if there were no regulations or government oversight. He said that transactions could be tracked through a central repository to facilitate trade and prevent illicit use.

Related: Indian government is rethinking crypto ban

Gandhi stated that the government should have an open mind toward economic transactions involving cryptocurrencies, but cautioned about the anonymity features that some blockchains have, adding that society must adhere to any compliance rules set by the state.

“A state will always want to give freedom to its citizens in terms of economic transactions. It enforces contractual obligations and taxes income and gains. So, any economic activity should be amenable to these kinds of things.”