Will cryptocurrency become legal in India? Do the Reserve Bank introduce its new digital currency? In March, finance minister Nirmala Sitharaman had said that the crypto would not be completely banned.
As of now, cryptocurrencies, including Bitcoin, are not banned in India. But, discussions are on about their legal validity. In other words, there is a lack of clarity regarding the concept.
Currently, Cryptocurrency and Regulation of Official Digital Currency Bill is under the consideration of the cabinet. It will be introduced in the parliament after receiving the cabinet’s approval. The decision is delayed because at the policy level, there needs some clarity on whether cryptocurrency should be given complete approval or RBI should introduce a digital currency instead of this.
Indian cryptocurrency agencies WazirX, UnoCoin, and CoinDCX claim to have 60 lakhs of customers. Data say that they hold cryptocurrencies worth Rs10,000 cr. A section of people believes that crypto has become a reliable asset. But, can one collect digital currency like physical currency? Can CBDC be kept private and transferred to another person? Will this completely replace physical money? The government needs clarity in all these aspects.
The Reserve Bank of India’s CBDC is different from cryptocurrencies as it will be under the control of the central bank. RBI deputy governor T Rabi Shankar had said that CBDC will be introduced by the end of this year. One may question if it is the interest Indians shown in cryptocurrency during the lockdown period that inspired the RBI to come up with digital currency. However, there is no clear picture of RBI’s digital currency. At the same time, as RBI had said, the digital rupee might be a sign that appears on smartphones and other gadgets. It may let people do the business and other transactions.
It is expected that the digital rupee will be available 24×7, and will reduce service delivery costs. CBDC will fall under the existing banking secrecy laws. Whether it contains personal data has to be checked. If CBDC can be collected or transferred anonymously will depend upon the technology the central bank develops.
The risk part of cryptocurrency is that it is mined by private parties. There is no complete guarantee from the government. In the wrong hands, it may be used for illegal and anti-social activities. Compared to cryptocurrency, which is prone to theft, CBDC will be a strong, secure and easy payment mode. It will not replace the physical currency from economic transactions.
As of now, no country has officially launched CBDC. Some reports say that China may bring about it in 2022 through Beijing Winter Olympics. Will India consider its own digital currency?
