In a landmark position, major Indian regulators and institutions consulted by the government are advocating a ban on private cryptos like Bitcoin and Ether, favoring the Central Bank Digital Currency (CBDC).
India strengthens its position against Bitcoin
In July 2024, several Indian government experts spoke out in favor of a possible ban on private cryptos like Bitcoin and Ether, during preparatory consultations. According to a senior official wishing to remain anonymous, “ CBDCs can do everything cryptos do, with more benefits and less risks“.
The Indian position is in line with the recommendations of the G20, of which India is a member. Indeed, the country adopted the IMF and Financial Stability Board (FSB) summary document in September 2023, which authorizes member countries to impose strict restrictions on crypto, including a possible total ban.
Indian authorities emphasize nevertheless their interest in blockchain technology, which they wish to exploit for socially beneficial uses such as the tokenization of government securities and the targeted allocation of subsidies.
The digital rupee as a credible alternative?
The growing success of the digital rupee (e₹) pilot strengthens the government's position. Launched in November 2022 for the wholesale segment and then extended to the retail segment in December, the Indian CBDC now has more than 5 million users and 16 participating banks.
The State Bank of India (SBI) has already demonstrated the practical potential of CBDCs through an innovative pilot project in Odisha and Andhra Pradesh. This program allows tenant farmers to access loans programmed specifically for the purchase of agricultural inputs.
RBI Governor Shaktikanta Das recently highlighted in Bengaluru that CBDCs could catalyze financial inclusion.
If the Indian government displays a hostile posture towards Bitcoin, citizens are following a radically opposite trajectory. Crypto adoption is experiencing meteoric growth: according to the latest report from Chainalysis, India dominates the global ranking of crypto adoption among 151 countries assessed, for the second year in a row.
In short, government attempts to impose CBDCs against Bitcoin seem doomed to failure. Paradoxically, each new restrictive measure towards cryptos is accompanied by an acceleration in their adoption by the population.
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