India is contemplating a ban on Bitcoin and other private cryptocurrencies to promote its Central Bank Digital Currency (CBDC), the digital rupee. However, CoinDCX CEO Sumit Gupta argues that CBDCs and cryptocurrencies serve different purposes and can coexist, suggesting that a ban might not be the best approach.
India Weighs Crypto Ban to Boost CBDC Adoption: Recent reports suggest that India is considering prohibiting the use of private cryptocurrencies, such as Bitcoin, to encourage the adoption of its CBDC. According to a Hindustan Times report, the decision stems from concerns over the risks associated with private crypto, with officials arguing that the digital rupee can provide similar benefits but with enhanced security. Since its pilot launch in November 2022, the CBDC has seen increasing adoption across both retail and wholesale sectors.
Regulators have consulted with market experts, who pointed out that CBDCs can promote financial inclusion, making it easier to deliver targeted funds to vulnerable populations. RBI Governor Shaktikanta Das has highlighted that the programmability of CBDCs could revolutionize how targeted subsidies are distributed, while the use of blockchain technology could benefit areas like government securities and targeted lending. He has been a vocal advocate for CBDCs and has previously underscored the risks associated with cryptocurrencies.
Although no final decision has been made yet, the government is still in the process of consulting experts and analyzing data from ongoing CBDC trials. India’s approach is also being shaped by the G20’s adoption of the IMF-FSB synthesis paper, which allows nations to implement stricter regulations on cryptocurrencies, including the option of an outright ban if necessary.
CoinDCX CEO Weighs In on the CBDC vs. Crypto Discussion: Sumit Gupta, CEO of CoinDCX, responded to the recent reports, challenging the notion that CBDCs could fully replace or outperform cryptocurrencies like Bitcoin. He emphasized that both serve distinct roles within the financial ecosystem, with CBDCs focusing on government-driven functions such as financial inclusion, while cryptocurrencies offer advantages like decentralization, wider market access, and innovation.
Gupta urged Indian regulators to consider how both technologies can coexist, potentially strengthening the financial system. He called for ongoing discussions to build a balanced and robust ecosystem that leverages the strengths of both CBDCs and private cryptocurrencies, rather than viewing them as direct competitors.
