[블록미디어]Cryptopolitan reported on the 22nd, citing local media, that the Indian government is leaning toward banning private cryptocurrencies such as Bitcoin and Ethereum, preferring the benefits of central bank digital currency (CBDC).
According to the Hindustan Times recently, major government agencies preferred to ban personal cryptocurrencies after consulting on cryptocurrency regulation. They cited the fact that CBDC offers similar benefits but less risk.
Government stance on cryptocurrency and CBDC
An official who requested anonymity said recent discussions concluded that the risks of private cryptocurrencies outweigh the benefits. This official said, “CBDC can do everything that cryptocurrency can do. In fact, CBDC has more advantages than cryptocurrencies and does not have the risks associated with private cryptocurrencies,” he said.
The government’s position is consistent with the adoption of a composite report by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in September 2023. Officials added that while the IMF-FSB report sets out minimum regulatory standards, it does not prevent them from taking more stringent measures, such as an outright ban.
Reserve Bank of India (RBI) Governor Saktikanta Das highlighted the potential of CBDCs for financial inclusion at a recent meeting in Bengaluru. India’s CBDC, Digital Rupee (e₹), has already secured more than 5 million users, and 16 banks have participated in the pilot project by the end of 2022.
State Bank of India (SBI) is also exploring CBDC applications, with pilot projects targeting tenant farmers in some regions.
Changes in India’s Cryptocurrency Policy
India’s stance on cryptocurrencies has changed significantly since 2013. At that time, the Reserve Bank of India (RBI) issued its first warning about virtual currencies. Several regulatory measures have since been implemented.
The 2016 currency reform served as an opportunity to promote cryptocurrency investment, and the popularity of digital payments increased. However, in April 2018, the Reserve Bank of India banned banks from brokering cryptocurrency transactions, leading to a significant decline in trading volume and market activity.
March 2020 marked a major turning point when India’s Supreme Court declared the ban unconstitutional. As a result, cryptocurrency exchanges began operating again and transactions became more active.
Afterwards, the government prepared a cryptocurrency regulation bill and also prepared a plan to distinguish between personal cryptocurrency and state-issued digital currency.
Currently, cryptocurrencies are not classified as legal tender in India. However, India is officially classifying cryptocurrencies as virtual digital assets (VDA) in its 2022 budget. Accordingly, a 30% tax will be levied on profits derived from trading, selling or using cryptocurrency.
Additionally, a 1% withholding tax is imposed on all cryptocurrency transactions with an annual transaction amount exceeding 10,000 INR.
The government maintains a cautious stance on private cryptocurrencies and plans to gradually expand it after analyzing CBDC pilot project data. The final decision on cryptocurrency regulation will be made after extensive consultation, but for now, the position in favor of CBDC over private digital assets appears to be firm.
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