Regulators in India are considering banning cryptocurrencies like Bitcoin and Ether and are instead, promoting the use of the digital rupee.
On Oct. 22, local media outlet the Hindustan Times cited two officials familiar with the matter who claimed that the government consulted with key institutions and regulators regarding private cryptocurrencies, including stablecoins, and concluded that the risks outweigh the benefits offered.
Central Bank Digital Currencies can âdo whatever cryptos do,â said one official, adding that âCBDCs have more benefits than cryptos, minus the risks associated with private cryptocurrencies.â
Although the specific parties involved in the consultation were not disclosed, the discussions were reportedly held ahead of a forthcoming discussion paper that the government is expected to issue on the topic.
Earlier this year, Indiaâs Secretary of Economic Affairs, Ajay Seth, revealed that an inter-ministerial groupâincluding the Reserve Bank of India, the nationâs central bank, and the Securities and Exchange Board of India, its market regulatorâwas working on a discussion paper to clarify the countryâs official stance on cryptocurrencies.The paper, originally slated for release in September, has been delayed, and it is unclear whether this is the same policy paper.
At the time, Seth referred to the IMF-FSB synthesis paper from July 2023, which advised against an outright ban on digital currencies. Instead, the paper proposed a balanced regulatory approach, one that Indiaâs finance ministers and central bank governors, along with other G20 nations, adopted later that year.However, the paper also highlighted that countries have the flexibility to impose stricter regulations.
âWhilst the IMF-FSB synthesis paper proposes to have a minimum threshold for regulation, it doesnât stop any country from adopting higher restrictions, including a complete ban,â the second official added.
A final decision on the matter will be made following further consultations, the report noted.Despite the anti-crypto stance, the official remained optimistic about the underlying blockchain technology, noting various socially beneficial use cases such as enhancing financial inclusion, tokenizing government securities, and delivering targeted subsidies more efficiently.
