- The RBI has long warned about cryptocurrencies being a threat.
- The Indian central bank is currently developing its own CBDC.
RBI Deputy Governor T. Rabi Sankar talked about the potential impact of central bank digital currencies (CBDCs) on cryptocurrencies, like bitcoin and ether, at a webinar organized by the International Monetary Fund (IMF), local media reported Friday.
The deputy Governor was quoted as saying:
“We (RBI) believe that CBDCs would actually be able to kill whatever little case there could be for private cryptocurrencies.”
Digital Rupee on Its Way
By “private cryptocurrencies,” the Indian government and the central bank refer to all non-government-issued cryptocurrencies, including bitcoin and ether. Sankar explained the central bank’s stance that cryptocurrencies should not be permitted “just because they are backed by hi-tech.”
Meanwhile, the Indian government is still working on the country’s crypto policy. The economic affairs secretary revealed that the government is finalizing a consultation paper on cryptocurrencies this week.
The RBI has long warned about cryptocurrencies being a threat to India’s financial system and should never be recognized as legal tender like some countries, including El Salvador, have done. The bank also warned that crypto could lead to the dollarization of the Indian economy. The Indian central bank is currently developing its own CBDC. The bank said it would take a “graded approach” to launch the digital rupee.
The Reserve Bank of India will launch its digital currency the year starting April 1, Finance Minister Nirmala Sitharaman said in her budget speech in February. The nation has imposed a tax on the income from the transfer of virtual assets at 30%, along with a TDS of 1%. From an outright ban on cryptocurrencies in 2016 to an upcoming Bill for regulation—the government’s stance on digital assets has changed considerably over the past few years.
