India has had a tense relationship with cryptocurrencies in recent years.In an ongoing event ‘ASSOCHAM- India International Fintech Festival’ Chief Economic Adviser (CEA) Anantha Nageswaran on June reminds crypto still have roadblocks to cross as cryptocurrency is still need to pass the test to become fiat currency. He further remarked that regulating cryptocurrencies is challenging for now and unlike fiat currencies, cryptocurrencies also do not fulfil the basic requirements such as having widespread acceptability, store value, and unit of account.
He stated while referring to Decentralised finance (DeFi):
“In my opinion, while it is considered innovation, I would reserve my judgement whether it is truly innovative or truly disruptive in a positive sense or is it something that we will come to regret.”
The plan of crypto taxation and Digital Rupee (CBDC) was unveiled by the Finance Minister during her Budget statement in February 2022. She mentioned that the Reserve Bank of India (RBI) will issue the central bank digital currency (CBDC) or Digital Rupee, based on blockchain and other technologies to stimulate the digital economy and lead to a more efficient and cost-effective currency management system.
RBI indicated in its annual report released on May 27 that it has been evaluating the benefits and drawbacks of implementing CBDCs in India, as well as the best design characteristics of CBDCs that may be implemented with little or no disruption. RBI also proposed a graded approach to the deployment of CBDC in the country to ensure financial stability, monetary policy compliance, and efficient currency and payment system operations.
CEA Nageswaran remarked that he agrees with RBI Deputy Governor T. Rabi Sankar, June 8 statement that cryptocurrencies and decentralised finance appear to be a matter of regulatory arbitrage rather than actual financial innovation at the moment.
