India to become one of the first countries to implement CBDC starting from next year
India seems to be taking a progressive stance on Bitcoin. Especially in the context of this country trying to agree on the classification and legality of this new asset class.
India will become one of the first countries to announce CBDC next year
Amid a flurry of cabinet meetings, industry interviews, and banking-related issues, the prime minister of India is speaking out about cryptocurrencies. At the Dialogue Sydney conference, Prime Minister Narendra Modi called on democratic nations to make the most of crypto and blockchain. He also stated that they should not be used for unethical purposes.
Take crypto-currency or bitcoin for example.
It is important that all democratic nations work together on this and ensure it does not end up in wrong hands, which can spoil our youth: PM @narendramodi
— PMO India (@PMOIndia) November 18, 2021
On Monday, Prime Minister Modi spoke about cryptocurrencies in money laundering and terrorist financing at a high-level meeting. The general atmosphere surrounding the meeting suggests that strong management measures are being taken, albeit of a forward-looking and progressive nature.
The Indian government has previously taken steps to establish a robust regulatory infrastructure for the fast-growing sector. It has had many high-level discussions, including one between the Central Bank (RBI), the Ministry of Finance, the Interior, and crypto experts and key industry participants from inside and outside India.
Despite the objective views expressed by several government ministers, RBI Governor Shaktikanta Das remained unconvinced. On Tuesday, the executive reaffirmed that allowing cryptocurrency exchanges could be dangerous to any financial system because central banks do not oversee them.
Despite the rise in popularity of cryptocurrencies in India, lawmakers remain divided over the need for a comprehensive regulatory system. A Bitcoin bill is expected to be presented to the Indian legislature in the next session. Many hope that this will bring investors and institutions peace and clarity.
India plans to reduce Goods and Services Tax (GST) on crypto exchanges from 18% to 1% through regulatory reclassification. Additionally, Peru’s central bank president recently announced that his country would join forces with India and two other countries to create its own central bank digital currency (CBDC). However, crypto regulation is still obscure in India.
The country will launch its first CBDC next year
According to Reuters, the Reserve Bank of India is gearing up to launch its first central bank digital currency in the first quarter of next year. As P. Vasudevan, general manager of the RBI Billing & Settlement Department, the pilot project could be launched in the first quarter of 2022.
A CBDC is a digital asset tied to a country’s official currency or essentially a digital version of fiat money. In the case of India, the country’s CBDC will be referred to as the Digital Rupee and pegged to the National Rupee.
Previously, the central bank had planned to launch its first CBDC in December, but due to no official schedule or clear roadmap, the launch was postponed.
Vasudevan said the RBI is looking at various issues related to which segments a CBDC should target, wholesale or retail, validation mechanisms, and other issues, including distribution channels.
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