As per broader speculations, India is on the verge of banning cryptocurrencies, however, the nation officially hasn’t restricted or announced any such restrictions. It is also among the nations with the highest crypto adoption rate.
With a harsh attitude towards cryptos, India is constantly expanding its CBDC development and integration to strengthen its economy.
In simple terms, CBDCs are the Central Bank Digital Currency of any nation that is backed by the national bank of that nation and it is a centralized ecosystem that is governed by the concerned department.
As per a recent report by Bloomberg, India has announced an alliance for the program with nations like Sri Lanka, Nepal, the UAE, and Bhutan among others to improve cross-border payments.
The outlet quoted a statement of T Rabi Shankar the Deputy Governor of RBI ” We have one arrangement with Sri Lanka. We are working out with other countries like the UAE and some neighboring countries as well.”
Available information also notes that the Reserve Bank of India has been constantly partnering with global banks to enhance it and establish an instant payment framework.
Despite a positive outlook over CBDCs, Indian officials still remain cautious about digital currencies including Bitcoin and others. India has given the concept of UPI, which is one of the most adopted services in the nation.
India to Remain Skeptic Over Digital Currencies!
Cryptocurrency has achieved widespread global popularity, but in India, it continues to face challenges in gaining acceptance.
The Reserve Bank of India (RBI) has consistently maintained a cautious view, with many agreeing that virtual currencies present more risks than benefits. Critics argue that the decentralized and unregulated nature of cryptocurrencies makes them prone to misuse, raising concerns about financial stability and security.
As a result, the future of digital currencies in India remains uncertain.
Even so, the Indian government has shown a willingness to explore the topic further, hinting at the possibility of future discussions or regulatory developments.
Since 2018, India has maintained a stringent approach to cryptocurrencies, further intensifying its stance in December 2023 when the Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore cryptocurrency exchanges for failing to comply with domestic regulations.
The country has also introduced a strict tax framework for cryptocurrency transactions. In April 2022, the government imposed a 30% tax on unrealized crypto gains alongside a 1% tax deducted at source (TDS), signaling its first significant effort to regulate the crypto market and exercise greater control over the sector.
Launched in December 2022, the e-rupee has experienced gradual adoption, recording only 1 million retail transactions by mid-2024, even with incentives such as salary payments using the central bank digital currency (CBDC).
However, despite these hurdles, the e-rupee pilot has managed to attract over 5 million users by mid-2024, reflecting a growing interest in the initiative.
An informed source revealed that the Finance Ministry is solely focused on creating rules that align with the nation’s economic interests, emphasizing that its decisions and intentions remain unaffected by global pressures.
Notably, the Ministry of Economic Affairs has been preparing a comprehensive paper on cryptocurrencies, which is anticipated to be released in the near future.
