RBI To Explore the Need For Digital Currency

While releasing a booklet, the central bank noted that private digital currencies/virtual currencies/cryptocurrencies have gained popularity in recent years

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The Reserve Bank of India (RBI) on Monday said it is exploring whether there is a need for a digital version of the rupee in the country, hinting at the possibility of formal entry of cryptocurrency. 

On Monday a booklet titled ‘Payment and Settlement Systems in India: Journey in the Second Decade of the Millennium’, released by RBI said, “Private digital currencies (PDCs)/virtual currencies (VCs)/crypto currencies (CCs) have gained popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks. Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it.”

If the banker’s bank allows cryptocurrency in the country, this will be considered as one of the watershed moments in the country’s banking system. Up until now, RBI has been skeptical and has rebuked the entry of cryptocurrency in the country. RBI in 2018 even barred all banks and financial institutions from dealing in transactions related to cryptocurrencies, which was later revoked by the Supreme Court. The government has even drafted ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019’ which proposes a 10-year prison sentence for persons who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies”.

Certainly, this slight shift in stance by RBI is a welcome step for crypto enthusiasts in the country. 

Interestingly, the announcement has also come at a time when cryptocurrency has been making the headlines because of its high trading price. The most popular cryptocurrency, Bitcoin, surpassed an all-time high of $40,000.

As we head towards the Union Budget 2021, crypto investors will try their luck to hear about cryptocurrencies during an hour long speech by the finance minister.

Rahul Pagidipati, chief executive officer of  ZebPay said, “We’re optimistic that the government now recognizes the huge potential of blockchain technology and of Bitcoin as a reserve asset for companies, individuals, and even central banks in the near future. Crypto assets, properly regulated, can bring tremendous economic benefit.

The government’s twin goals of promoting prosperity and protecting people from fraud and harm are our goals, too. That’s why we have world-class security, KYC and AML policies.

We hope 2021 will bring healthy regulations for crypto investors, so they can know how to pay taxes correctly and access all the potential of this revolutionary new asset class.”

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