According to Business Standard, the RBI is examining the viability of a central bank digital currency and may conduct testing early next year. RBI or the Reserve Bank of India is the central bank of India. India is also planning to ban the use of crypto as a payment method but will regulate it as an asset.
India and Crypto Ban
The government of India intends to introduce a crypto regulatory measure in the parliament. Although it is still working on its contents. The bill appears to have drifted away from earlier plans to outlaw cryptocurrency in the country. The government will prohibit active solicitation from crypto companies, including exchanges and platforms. As a result, WazirX and Bitbins – leading exchanges in India, have paused their ads, as reported by Economic Times.
On Monday, the government met with leaders from the crypto business. Adding to a series of closed-door conversations between the government and the RBI that had taken place in recent days.Price arbitrage has surfaced as a new source of concern, according to ET on Wednesday, citing anonymous sources. As one source stated, authorities’ main concern is keeping track of various exchanges. That is to say that when there is a large price difference among various exchanges there is an opportunity for price arbitrage. Accordingly, the exchanges are pressing for a regulatory sandbox to fine-tune the restrictions.
According to the report, the government can name the Securities and Exchange Board of India as the regulator. But, the government hasn’t made any “final call” on the matter.
RBI launches CBDC test project
According to a local media source, the RBI is investigating the viability of a central bank digital currency (CBDC). So, it may begin a trial project in the fiscal year from April 2022 to March 2023.
Central bank digital currencies are exactly what their name implies. They are digital representations of a country’s physical currency supported by a country’s monetary reserves. They are comparable to stable coins, which are fixed to a single fiat currency 1:1. The design of CBDCs is to make peer-to-peer electronic payments and, to hurry money disbursements in times of disaster. During times of stress, like last year’s coronavirus-induced country-wide lockdown, the CBDC may assist governments in airdropping money straight into the pockets of the poor.
India is investigating several underlying concerns about a digital rupee, including its dissemination, the validation procedure, and whether it will be retail (accessible to the general public) or wholesale (restricted to limited financial institutions).
CBDC and other countries
According to the Atlantic Council, around 90 governments throughout the world are now researching with CBDCs.
The Bahamas and other Caribbean island states have already implemented CBDCs completely. China appears to be the global leader in the development of a digital currency. It handed over 10 million digital yuan to Shenzhen residents a year ago. By October end, China has used CBDC to execute 62 billion yuan ($9.7 billion) in transactions, according to a People’s Bank of China official.
According to ZyCrypto, the country is also urging McDonald’s, Visa, and Nike to expand the testing of CBDC. As it plans to establish a full-fledged CBDC before the Beijing Winter Olympics in February 2022.
While the hype around CBDCs shows no signs of slowing, some observers remain doubtful. Whistle-blower Edward Snowden has called CBDCs “cryptofascist currencies” that will “annihilate the savings of every wage-worker.”
