KEY POINTS

  • India to launch digital currency
  • Expected to give a boost to fintech industry in country
  • Industry happy about crypto discussion in country's budget
     

India will soon roll out its own digital rupee powered by blockchain technology. Experts see this announcement as a "booster dose" for the crypto industry in the country, despite the government announcing a 30% tax on crypto income.

Addressing the annual budget session of the Indian parlaiment Tuesday, Finance Minister of India Nirmala Sitharaman said, “Digital currency will also lead to a more efficient and cheaper currency management system. It is therefore proposed to introduce digital rupee using blockchain and other technology to be issued by the Reserve Bank of India starting, 2022 and 2023.”

The central bank digital currency (CBDC) is a digital form of currency that can be transacted using wallets and is regulated by the central bank.

Shivam Thakral, CEO of Indian exchange BuyUcoin, hailed the move and said it will catalyze the growth of blockchain infrastructure in the country.

"The launch of RBI’s CBDC will prove to be a momentous occasion for the digital asset industry as it will create a government-approved market for the launch of new/existing digital assets," Thakral told International Business Times.

Thakral noted that if the RBI allows the trading of CBDC on private exchanges, "it will add a new dimension to public-private partnerships in India’s fintech space."

"India is slightly lagging in the digital currency race, mainly due to the regulatory hurdles and reluctance in accepting the growing popularity of digital assets/digital currency around the world," Jay Hao, CEO of global exchange OKX.com said.

"I hope the announcement made by the finance minister regarding CBDC is implemented without any further delay as it will give a much-needed push to the blockchain industry in India."

Sumit Gupta, Co-founder and CEO of Indian exchange CoinDCX said, "Introduction of CBDC sends a clear signal of India being a digital-first, efficiency-driven, and transparency-led system."

"CBDC with the backbone of Blockchain will help us hold a powerful position in the global economy. We welcome the move and congratulate the govt for this visionary move," Gupta told International Business Times.

China has already launched a central bank digital currency. Nigeria also launched the eNaira, which is a non-interest-yielding CBDC. The Bahamas and five other islands in the East Caribbean have also introduced CBDCs.

The Finance minister said that a 30% tax would be charged on income from the transfer of virtual digital assets and no set-off will be allowed for losses.

"The move clearly shows the government’s inclination towards legalizing crypto in India. The cost of acquisition of crypto assets to be allowed as a deduction is expected to drive mass adoption of crypto and boost investor confidence," Thakral said.

The announcements came when discussions were ongoing about the introducing a bill that will classify cryptos as assets.

"The crypto industry in India got its booster dose from the regulators which was pending for a long time. We are delighted to see some concrete discussion around crypto in the Union budget," Thakral said.

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