India proposes to implement cryptocurrency ban! Official: CBDC has more advantages
According to Cryptonews, India is currently weighing whether to ban cryptocurrencies such as Bitcoin and Ethereum, and this shift in stance stems from the government's concerns about the risks of private cryptocurrencies. At the same time, authorities are evaluating the advantages of central bank digital currencies (CBDCs), believing that they can provide similar benefits but with less risk.
Discussion on India's Cryptocurrency Ban and the Expansion of CBDC
The Hindustan Times reported on Tuesday that Indian regulators are increasingly inclined to ban cryptocurrencies after consulting with key institutions. Although the specific entities involved in these discussions have not been publicly disclosed, officials have stated that the risks of cryptocurrencies, including stablecoins, outweigh any potential benefits.
Ajay Seth, Secretary of the Indian Ministry of Economic Affairs, revealed in July that an inter ministerial group consisting of key institutions including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) is developing policy documents on cryptocurrency. The document was originally scheduled to be released in September, but was subsequently postponed, increasing uncertainty about India's official stance on this issue. Local media expect the document to give the country flexibility to take stricter measures, including a possible ban on private cryptocurrencies.
Meanwhile, the Reserve Bank of India (RBI) has been actively promoting the adoption of its retail CBDC. However, the current trading volume is still only about 18000 transactions per day, far below RBI's year-end target of one million transactions.
RBI is developing new features, including offline transactions and integrating digital rupees with popular Unified Payment Interface (UPI) to increase adoption rates.
The History and Ban Debate of Cryptocurrency Regulation in India
It is worth mentioning that India's policy attitude towards cryptocurrency has undergone a series of twists and turns from the past to the present. In 2018, the Reserve Bank of India (RBI) implemented a ban on banks promoting cryptocurrency trading, but the decision was overturned by the Indian Supreme Court in 2020.
Although this is a legal victory for the cryptocurrency industry, government officials, including Finance Minister Nirmala Sitharaman, remain cautious about recognizing the legitimacy of private cryptocurrencies.
In November 2023, Shaktikanta Das, Governor of the Reserve Bank of India, once again expressed concerns about the potential destabilizing impact of cryptocurrencies on the Indian economy, emphasizing support for CBDC as a safer alternative.
Although international organizations such as the International Monetary Fund (IMF) and the Financial Stability Board (FSB) advocate for a balanced regulatory approach, India seems to be open to implementing stricter regulations (or even a complete ban) at this stage.
