Reserve Bank Set To Roll Out India’s Own Cryptocurrency. Know What Is CBDC

A Lok Sabha bulletin released on Tuesday said the cryptocurrency Bill will allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses

New Delhi: The Centre is all set to introduce a new Bill during the winter session of Parliament to ban private cryptocurrencies and create guidelines for a legal digital currency by the Reserve Bank of India (RBI), according to a Lok Sabha bulletin released on Tuesday.

To create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

The RBI in July had said that it was working towards its own digital currency, Central Bank Digital Currency (CBDC).

The term CBDC refers to the virtual form of a fiat currency. It is a legal tender issued by a country's central bank in a digital format. A CBDC is an electronic record or digital token of a country’s official currency. As such, it is issued and regulated by the country’s monetary authority or central bank. The CBDC would be something that supports the banking system or complements the existing frameworks in place.

The government also said that it is planning new changes in the Income-Tax (I-T) laws in a bid to bring cryptocurrency gains under the tax radar and also to introduce them during the Union Budget next year.

Earlier, RBI Governor Shaktikanta Das had issued cautions over cryptocurrencies. He said debate and discussions on the digital currency are needed before giving the go-ahead.

Hence, a comprehensive Bill is likely to be tabled in Parliament to create a framework on cryptocurrency dealings in India.  

According to media reports, one crypto exchange top boss said that India might tighten cryptocurrency rules instead of imposing an outright ban. 

Finance Minister Nirmala Sitharaman had ruled out a complete ban on cryptocurrencies. Sitharaman in an interview to ET in August had said: “I've already said that we are not saying no to cryptocurrency. We are saying we'll have to see how this technology can help fintech to maximise the potential that it has.”