“Crypto as a means of payment is a logical extension of fintech, but crypto as an asset class and crypto as a substitute for currency is an area with which all currencies in the world and all regulators of the world are struggling We will find our way with caution, caution We have a very clear goal as to who will make crypto in India. The government said that RBI will do digital rupee crypto as a first metric and then we will see how the market develops,” Chandrasekhar said.
Finance Minister Nirmala Sitharaman said the RBI has raised concerns about cryptocurrencies, noting that they should be banned as they can have a destabilizing effect on monetary and fiscal stability.
She said the RBI has expressed concern over the adverse effects of cryptocurrencies on the Indian economy.
The RBI mentioned that cryptocurrencies are not a currency as every modern currency has to be issued by the central bank or the government, she said.
Further, she said, the value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies is based solely on speculation and expectations of high returns that are not well anchored, so it will have a destabilizing effect on a country’s monetary and fiscal stability.
On the other hand, the Reserve Bank of India is in the process of implementing Central Bank Digital Currency (CBDC) in a progressive manner for the wholesale and retail segments.
The introduction of the CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman and the necessary amendments to the relevant section of the RBI Act 1934 were made with the passage of the draft Finance Bill 2022, said Ajay Kumar Choudhary, Executive Director. (Fintech), RBI.
The passage of the bill allowed the RBI to conduct a pilot project and the subsequent issuance of the CBDC.
CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies or cryptocurrency that have proliferated over the past decade. Private virtual currencies do not represent any person’s debt or liability because there is no issuer.
India’s official digital currency is expected to debut in early 2023, mirroring one of the currently available e-wallets run by private companies. The CBDC will be a state-backed digital currency.