India will soon develop its own digital currency, a digital rupee that will finally legalize virtual currencies. In her 4th Union Budget Speech, India’s Finance Minister Nirmala Sitharaman said India’s virtual currency will be based on blockchain and arrive soon.
The Minister said, “The introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.”
She told that the Reserve Bank of India (RBI) will begin issuing the virtual currencies before April 2023.
The announcement overrides India’s own previous attempts to nullify the spread of cryptocurrencies. Previously, RBI had issued circulars to ban banks and anyone with links to virtual currencies. The change of mind comes amidst a “phenomenal increase” in transactions of virtual assets that Sitharaman said made it imperative for the government to legalize and regulate.
Meanwhile, the Sitharaman also said the government will impose a 30% tax on virtual assets.
India’s Digital Rupee, regular bills in electronic form!
India will call it Central Bank Digital Currency (CBDC) and will be the same as the regular bills. One will be able to exchange them one-to-one with the fiat currency (existing denominations).
RBI deputy governor T Rabi Sankar has earlier said that India’s digital currency will be different from other cryptocurrencies. India wants to promote its internet economy and feels that regular cryptos like BitCoin and Ethereum are risks to the financial system.
He had further said that CBDC is not comparable to the private virtual currencies that have mushroomed over the last decade. Private virtual currencies sit at substantial odds with the historical concept of money, Sankar added.
Likewise, India’s digital currency will e a digital rupee in an electronic form just like Digital Yuan that has accelerated in China following its pilot tests.
Digital currency is finally coming to Asia’s third-largest economy marking a momentous acceptance and approval after years of scrutiny.
Meanwhile, Nepal has still banned virtual currencies. The Federal bank has sternly warned citizens not to engage in any activity relating to trading or mining virtual currencies. But with the neighboring country India waving a green signal, Nepali enthusiasts could fancy some hope.