As the Indian government prepares to introduce a bill in the winter session of Parliament to set regulations and standards for cryptocurrencies, the RBI is prepared to launch the digital currency.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be debated in the Lok Sabha next week. The bill’s goal is to “provide a suitable framework for the Reserve Bank of India’s official digital currency to be developed.” It also intends to make private cryptocurrencies illegal in India, with few exceptions for promotional purposes.
There are presently no regulations or prohibitions in place addressing the use of cryptocurrencies in the country.
The Supreme Court invalidated an RBI circular dated April 6, 2018, barring banks and organisations regulated by it from providing virtual currency services on March 4, 2021.
The Reserve Bank of India has declared its opposition to cryptocurrencies on numerous occasions, arguing that they represent severe challenges to the country’s macroeconomic and financial stability, and that the number of investors trading on them, as well as their purported market value, are both questionable.
The Reserve Bank of India, according to sources, is working on a phased release of its own digital currency. A CBDC is a central bank-issued digital form of legal money. It works in the same way as fiat money and can be traded in a one-to-one ratio for fiat money. Its only distinguishing feature is its appearance.
CBDC is comparable to central bank money, however it is not printed on paper (or polymer). It is sovereign currency in electronic form, and it would be recorded as a liability on a central bank’s balance sheet (currency in circulation). The underlying technology, shape, and application of a CBDC can be customised to fulfil unique requirements. CBDCs should be able to be redeemed for money.
RBI Governor Shaktikanta Das repeated his opposition to cryptocurrencies earlier this month, arguing that because they are unregulated by central banks, they pose a severe threat to any financial system.
In response to the rise of cryptocurrencies such as Bitcoin, which the central bank has expressed worry about, the RBI revealed its desire to create an official digital currency.