India considers crypto ban in favor of CBDCs
Regulators see Central Bank Digital Currencies as safer option
Cryptocurrencies like Bitcoin could soon be banned in India as the country favors widespread adoption of Central Bank Digital Currencies (CBDCs).
The country is already known to have a long-standing turbulent relationship with crypto. In 2018, the Reserve Bank of India (RBI) ordered financial entities to cut off ties with businesses or individuals handling cryptocurrencies, as reported by Reuters.
However, in 2020, this trading ban for digital currencies was lifted by the supreme court.
Now, talks of a crypto ban have surfaced again. This time, regulators appear to strongly prefer CBDCs over crypto.
According to Hindustan Times, undisclosed regulators in the country emphasize that CBDCs have great potential for financial safety, such as protecting consumers from fraud and ensuring stable transactions, as well as for financial inclusion by providing access to banking services for unbanked populations and facilitating low-cost transactions.
Key regulators and institutions involved in discussions with the government seem to support a ban on cryptocurrencies, arguing that CBDCs can provide similar benefits without the associated risks. This information comes from two officials familiar with the matter.
One official, who wanted to stay anonymous, said that “CBDCs can do whatever cryptos do,” adding “CBDCs have more benefits than cryptos, minus the risks associated with private cryptocurrencies.”
Back in November 2023, Shaktikanta Das, the governor of RBI, said that cryptocurrencies could destabilize the India's economy. According to Crypto News, the governor also stressed that CBDCs, or digital rupees, are more secure in comparison to these cryptocurrencies.
In a speech during the RBI@90 Global Conference, the governor said “In India, the Reserve Bank launched CBDC pilots in both retail and wholesale segments in late 2022,” adding that the retail pilot gained more than five million users.
The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, announced that the central bank's retail digital currency (CBDC) pilot program now has over 5 million users and 16 participating banks.
— ThuanCapitalGlobal (@ThuanGlobal) August 26, 2024
However, he advised against rushing to implement the CBDC across the entire… pic.twitter.com/o48msrOWRj
The governor stated that CBDCs can be introduced gradually and have the potential to support future payment systems for both domestic and cross-border transactions.
According to Fortune India, he stated at the 188th Annual General Meeting of the Bombay Chamber of Commerce and Industry that "the future of money is CBDC, and it’s not in competition with UPI," emphasizing that both can coexist.
While a final decision on the crypto ban is pending, India’s increasing support for CBDCs indicates a preference for regulated digital currencies over decentralized ones.
