India’s central bank will issue a digital rupee in the 2022-2023 financial year, which begins April 1st. Finance Minister Nirmala Sitharaman stated the introduction of the digital rupee would be based on “blockchain and other technologies.”
The move would make India one of the world’s largest economies to introduce a central bank digital currency (CBDC).
India’s push for a digital rupee mimics the Chinese blueprint, which is testing a digital yuan.
Coming soon: Digital rupee https://t.co/0d4OwZwH6P
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UPDATE: India also plans to impose 30% tax on income from the transfer of virtual digital assets.
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“Introduction of a central bank digital currency will give a boost, a big boost to the digital economy,” Nirmala Sitharaman stated, CNBC reports.
China has been working on a digital version of its yuan since 2014 and is furthest ahead when it comes to launching CBDCs globally.
Over the past two years, the People’s Bank of China has been carrying out trials in the form of lotteries, where digital yuan is handed out to citizens in certain cities for them to spend. More recently, the central bank has looked to expand the use of the digital yuan. China has not launched its digital currency nationwide yet and has no timeline to do so, however.
Elsewhere, Japan is looking into its own CBDC, and the U.S. Federal Reserve last month released a study into a digital dollar, but did not take a firm position on whether it would issue one.
While India is pushing forward with a digital rupee, it has tried to take a tougher stance on cryptocurrencies like bitcoin and is currently working on regulation for the sector.
As WLT noted, central bank digital currencies restrict your financial freedom, privacy, and give government ultimate control of the money supply.
Here it comes… Central Bank Digital Currency in India. https://t.co/LxXSZ7i9tW
— Sharell Cook (@AboutIndia) February 1, 2022
Yahoo! Finance added:
“There has been a phenomenal increase in transaction in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime,” Sitharaman said in the Indian budget speech, which lasted for over two hours.
Speaking on the adoption of CBDCs, Sitharaman said that a “digital rupee” will be “issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy.”
When asked later on about taxing crypto transactions without a regulation, the finance minister said, “We have circulated a paper, inputs are coming in, public stakeholders are coming in so regulation goes through that process. I don’t wait till regulation comes into place taxing people who are earning profits. Can I?”
The words crypto or cryptocurrency weren’t used in the budget speech. However, the finance minister used the phrase “virtual digital asset,” which the industry interprets as a term for cryptocurrencies and non-fungible tokens (NFTs). The naming and the steps taken doesn’t mean crypto is now legal, but the industry views the moves as steps toward giving cryptocurrencies legitimacy.
“India is finally on the path to legitimizing the crypto sector in India,” said Nischal Shetty, co-founder and CEO of WazirX, one of India’s largest crypto exchanges.
Shetty said the move to launch a blockchain-powered digital rupee is “phenomenal” as it will “pave the way for crypto adoption.” He said the “biggest development” was the “clarity on crypto taxation, which will add the much-needed recognition to the crypto ecosystem of India.”
Sitharaman said income from the transfer of virtual digital assets should be taxed at rate of 30%.
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