The delay in India’s cryptocurrency and digital asset law is justifiable due to its complexity and the potential impact on investors and the larger financial market. The Cryptocurrency and Regulation of Approved Digital Currency Bill, in its current form, seeks to prohibit all cryptocurrencies as a payment option in India, with the exception of a few private coins to promote underlying technologies, by also letting the Reserve Bank of India to establish an actual digital currency.
The Reserve Bank of India expressed doubts and stated in multiple communications that it supports a total ban on cryptos, stating issues about macroeconomic and financial stability, exchange management challenges, and monitoring and regulating such currencies. The government, on the other hand, has already stated that it wants to support underlying technology like blockchain. Industry experts agree that changes to the bill, together with more thorough discussions, can drive India to the frontline of blockchain technology.
The RBI will introduce the digital rupee within the next year, according to the Finance Minister’s budget. While the Central Bank Digital Currency (CBDC) and cryptocurrencies are not the same, experts believe that they need extensive planning.
Professor Lekha Chakraborty of New Delhi’s National Institute of Public Finance and Policy on this matter says Both need thorough planning and coordination of fiscal and monetary policies. The political economy of digital currency is complex, and there has been no internal dispute between the RBI and the Ministry of Finance on this issue so far. In addition to this he says the deliberations take a long time.
Some members of the RBI’s central board have also shown interest in a more balanced approach to digital assets, taking into account technical advancements and their larger effects on financial markets. The administration has once again postponed debate on the law that has been in the works for more than a year.
Last year, the bill was mentioned in both the budget and monsoon sessions. The bill was also scheduled to be introduced during the winter session, which ended on December 23, however it was never introduced. Finance Minister Nirmala Sitharaman, on the other hand, claimed that the bill’s specifics would be made public once it was approved by the union cabinet.
“Due to the complexity of the crypto bill, the government’s delay in making a judgement is more or less justifiable,” said an unknown digital asset expert.
“Despite the RBI’s reservations, the government is consulting a wide range of specialists and pursuing a comprehensive strategy,” he added.
Investors and leading cryptocurrency exchanges in India have praised proposals to govern the crypto market and officially assist in the development of underlying technologies.
“Cryptocurrency is a form of financial revolution. Crypto legislation should enhance investor confidence if a reasonable regulatory framework is in place. Ms Chakraborty stated that “the convenience of transactions can enhance entrepreneurial confidence and catalyse trade and investment.”
“On February 1, during a news conference following the Budget Speech, the finance minister clarified that cryptos are neither currencies nor digital legal money. They are risky investments. The digital legal tender is, of course, the Central Bank Digital Currency (CBDC), which was announced in the Budget. The regulatory framework is critical for the implementation of digital currencies and assets, yet India has yet to announce any.