E-Paper
Union Budget 2022: India's own digital currency coming soon, announces finance minister Nirmala Sitharaman
The Supreme Court nullified a circular issued by the RBI banning cryptocurrencies in 2020 and also set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services with connection to virtual currencies in March this year.
India’s own digital currency will soon be a reality, Union finance minister Nirmala Sitharaman said on Tuesday. Presenting her fourth Budget, Sitharaman said that the digital currency will be issued by the Reserve Bank of India (RBI) in 2022-23 using blockchain technology. She added that it will give a big boost to the economy.
Union Budget 2022: Full Coverage
At the same time, the finance minister a 30 per cent tax on proceeds of virtual or digital assets.
The RBI had said in July last year that it was working towards its own digital currency.
Calling it Central Bank Digital Currency (CBDC), RBI deputy governor T Rabi Sankar had said that it will be same as a fiat currency and exchangeable one-to-one with the fiat currency.
Also Read | Highlights of Nirmala Sitharaman's Budget speech
He had further said that CBDC is not comparable to the private virtual currencies that have mushroomed over the last decade. Private virtual currencies sit at substantial odds to the historical concept of money, Sankar added.
The Reserve Bank of India has on several occasions highlighted that it feels cryptocurrencies like BitCoin, Ethereum and Dogecoin among many others pose a risk to financial stability and also questioned its claims of market value while asking investors to not get “lured” by the promises of returns on cryptocurrencies.
The government planned to introduce a bill to regulate cryptocurrency in the winter session of Parliament, but it could not happen.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, building on a previous version, initially aimed to ban private cryptocurrency operators, and simultaneously empower the RBI to issue CBDC.
Experts and key bodies, however, favoured a tightly controlled cryptocurrency regime in India over a blanket ban which will have strict transaction protocols and also the imposition of taxes to help the government generate revenue.
The country first began exploring cryptocurrency regulation in 2017, when an inter-ministerial committee was set up to explore methods to regulate virtual currencies.
