New Delhi: Finance Minister Nirmala Sitharaman said on Friday that the government has the sovereign right to tax profits generated by cryptocurrency transactions, and that the decision on whether to prohibit or not to ban will be based on feedback from discussions.

"I am not going to legalise it or outlaw it at this moment," the minister stated in response to a general discussion on the Union Budget. After talks, I'll decide whether to prohibit or not prohibit".

"Whether it is lawful or illicit, it is a separate topic, but I would tax because it is a sovereign right to tax," she said of profits derived from cryptocurrency trades.

The minister was responding to a question about bitcoin from Congresswoman Chhaya Verma. Verma had inquired about the legality of levying a tax on bitcoin.

Only RBI-issued 'Digital Rupee' will be recognised as currency, Sitharaman announced in her Budget speech on February 1, and the government will collect a 30 percent tax on gains made from any other private digital assets starting April 1.

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