With growing interest in central bank digital currencies globally, India may move to ban private cryptocurrencies, positioning its digital rupee as the future of its financial ecosystem.
India is moving closer to a significant decision regarding the future of cryptocurrencies within its borders, with the government leaning toward favoring Central Bank Digital Currencies (CBDCs) over private cryptos such as Bitcoin BTC $84 062 24h volatility: 0.8% Market cap: $1.67 T Vol. 24h: $30.44 B and Ethereum ETH $1 854 24h volatility: 0.3% Market cap: $223.95 B Vol. 24h: $16.05 B .
According to a local news report on Tuesday, key officials and regulators the country consulted on the matter, voiced concerns that the risks of digital assets including stablecoins, far outweigh their benefits for everyday transactions.
Consultations Ahead of Major Decision
Officials shared their views during consultations on October 22, explaining that CBDCs, such as the digital rupee (e₹), offer the same advantages as cryptocurrencies without the inherent risks.
“CBDCs can do whatever cryptos do. In fact, CBDCs have more benefits than cryptos, minus the risks associated with private cryptocurrencies,” said one official, speaking anonymously to Hindustan Times.
One of the primary concerns raised during these discussions centered on the instability of stablecoins, which are pegged to national reserve assets like fiat currencies or commodities such as gold. Despite their backing, stablecoins pose systemic risks, as seen with TerraUST’s collapse in 2022 when it lost its peg to the US dollar, causing a catastrophic reaction to the industry.
While the identities of the officials involved in these discussions were not disclosed, it has been reported that these consultations took place ahead of the government’s planned discussion paper on cryptocurrency regulations. The paper is expected to address the growing concerns around private digital assets.
A Potential Ban and Stricter Regulations
The upcoming decision could result in India enforcing stricter regulatory measures or even a complete ban on private cryptocurrencies.
As a G20 member, the country recently adopted the International Monetary Fund (IMF) and Financial Stability Board (FSB) synthesis paper, which allows countries to implement higher restrictions on crypto than the global minimum standard set by the synthesis paper. While this does not mandate an outright ban, it provides the legal framework for India to pursue one.
India has long expressed reservations about cryptocurrencies, even as the country’s population has shown significant interest in digital assets. Earlier this month, Reserve Bank of India (RBI) Governor Shaktikanta Das reaffirmed his position, stating that CBDCs are better suited for cross-border transactions than cryptocurrencies.
He suggested that CBDCs could mitigate the risks posed by private digital currencies, including Bitcoin, Ethereum, and stablecoins.
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