India’s cautious approach to Central Bank Digital Currency (CBDC) results in 5 million users. Explore how India balances CBDC development with ambiguous crypto regulations.
India’s Central Bank continues to navigate the complex landscape of Central Bank Digital Currencies (CBDC) with a careful and measured approach. Despite the rapid evolution of digital currencies globally, India has resisted the temptation to hastily implement a CBDC. This conservative stance aligns with the country’s broader approach to digital assets, including its reluctance to regulate cryptocurrency transactions.
Since the introduction of the digital rupee pilots in late 2022, India has successfully onboarded five million retail CBDC users and collaborated with 16 banks, as reported by Reserve Bank of India (RBI) Governor Shri Shaktikanta Das. His remarks came during the inaugural address at the RBI Global Conference on Digital Public Infrastructure and Emerging Technologies on August 26.
Governor Das highlighted that India’s CBDC pilots encompass both retail and wholesale segments. The retail pilot initially focused on payment use cases, with ongoing tests exploring both offline functionalities and programmable features of the digital rupee. Das reiterated the importance of understanding the full impact of a CBDC on users, monetary policy, and the financial system before considering a broader implementation.
India remains committed to a phased introduction of its CBDC, allowing time for comprehensive data collection and analysis from pilot programs. Governor Das expressed confidence in the potential of CBDCs to support the payment systems of the future, not just within India, but also for cross-border transactions. One potential use case mentioned by Das is the ability of CBDCs to ensure targeted delivery of funds, which could benefit sectors like agriculture by improving access to credit for tenant farmers.
The governor also touched upon other important features under consideration, such as anonymity and offline availability, which would be rolled out in stages.
While India progresses with its CBDC exploration, the country’s stance on cryptocurrencies remains ambiguous. Despite some positive signals, such as the return of Binance to India, the government has yet to establish a clear regulatory framework for crypto assets. In early August, Pankaj Chaudhary, the Minister of State in India’s Ministry of Finance, confirmed that the government has no immediate plans to regulate cryptocurrency transactions, noting that these assets remain unregulated, and no data is being collected on them.
As India prepares to overhaul its digital asset regulations, with the Department of Economic Affairs drafting a crucial consultation paper on cryptocurrency legislation, the nation’s cautious approach to digital currencies—both CBDC and crypto—remains evident.
