India’s Regulators Consider Digital Rupee Safer, More Inclusive Than Crypto

Key Takeaways

• Indian officials believe its CBDC, the Digital Rupee, is better than cryptocurrencies.
• Reports claim India might consider banning crypto assets like Bitcoin and Ethereum.
• The reports of the possible ban come within months of the WazirX hack. 

The Indian government is reportedly considering banning cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) after consulting with key regulators and government institutions.

Instead, the government plans to promote using the Digital Rupee, India’s central bank digital currency (CBDC).

Digital Rupee Is Better?

Indian officials believe that its CBDC, the Digital Rupee , offers advantages over Bitcoin and other altcoins and plan to promote its use in the future.

“CBDCs can do everything cryptos can do, but with more benefits and fewer risks,” an official told Hindustan Times , speaking on condition of anonymity.

According to sources close to the matter, the Indian government has held multiple consultations with financial regulators to assess the potential benefits and risks of the crypto market.

After reviewing feedback, officials concluded that the risks associated with traditional crypto assets like Bitcoin and Ethereum outweigh their benefits.

A discussion paper outlining the government’s final decision on the crypto ban and the results of the consultations is on the way, although no release date has been set.

A Conundrum

India’s crypto regulatory saga has been ongoing for years, marked by a banking ban, a 30% tax, and a lack of clarity or user protection.

Despite a 2020 court order promising comprehensive regulations, none have been forthcoming.

India boasts one of the fastest-growing cryptocurrency markets, with adoption rates among the highest in the world .

In the past four years, the country has produced numerous crypto unicorns.

However, the absence of regulatory clarity and growing criminal and scam activities have made it challenging for Indian investors to navigate the market.

The recent WazirX hack , which saw the exchange lose over $230 million in customer funds, highlights the country’s crypto woes.

Customers in India have demanded the return of the remaining 60% of the crypto funds, but the exchange has refused, and they are instead seeking a moratorium in Singapore.

RBI response to complaint against WazirX. Source: X

Thousands of online complaints and requests for action from the central bank have been ignored.

The Reserve Bank of India (RBI) has simply warned users against investing in crypto, claiming it falls outside its purview.